The yield on US Treasury bonds has declined moderately, while market participants continue to analyze statistical data and statements by Fed policymakers in an attempt to clarify the economic outlook.
The yield on 5-year Treasury bonds decreased by 6.4 basis points, reaching 3.089%, while the yield on 30-year bonds was 3.189% (-2.3 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 5.5 basis points to 2.998%, while the yield on 10-year bonds fell to 3.054% (-3.9 basis points).
Yesterday, Fed Chairman Jerome Powell pointed to the Fed's firm commitment to reducing inflation, adding that this process is likely to cause some “pain.” Powell also noted that the Fed is “hastily” raising interest rates and is seeking to “move into restraining territory quickly enough”, namely, to raise rates to levels that will restrain rather than stimulate economic growth. In general, investors continue to be concerned about the slowdown in the economy and the aggressive tightening of the Fed's policy.
As for the US data, today at 12:30 GMT a report on personal income and expenses for May will be published, as well as the PCE price index ex food, energy - the Fed's preferred inflation indicator. Economists expect that personal income increased by 0.5% compared to April, while personal spending increased by 0.4%. Meanwhile, the PCE price index ex food, energy, according to forecasts, grew by 0.4% on a monthly basis and by 4.8% per annum. In addition, at 12:30 GMT, the US will announce a change in the number of initial applications for unemployment benefits over the past week. Consensus estimates suggest a decrease to 228 thousand from 229 thousand a week earlier. In addition, at 13:45 GMT Chicago Purchasing Managers Index for June will be published. Economists expect the index to fall to 58.0 from 60.3 in May.