The yield of US Treasury bonds has grown moderately, while market participants are monitoring the development of the situation around the Russian-Ukrainian conflict, and are also waiting for the speech of the head of the Federal Reserve.
The yield on 10-year Treasury bonds rose by 3.5 basis points, reaching 1.746%, while the yield on 30-year bonds was 2.125% (+1.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, rose by 8.7 basis points to 1.392%.
Yesterday, the yield of 10-year Treasury bonds fell sharply (to 1.68%) amid increased demand for safe haven assets in response to the escalation of tensions in Ukraine. The tense geopolitical situation also caused a significant increase in oil prices - Brent oil prices rose above $110 per barrel, and the cost of WTI approached to $109 per barrel - which increased concerns about further growth in consumer inflation and a slowdown in the economy.
Today, the focus of investors' attention will be the speech of Fed Chairman Powell in the US Congress (at 15:00 GMT). Powell is likely to announce that the Fed will be ready to take additional measures to control inflation. However, against the background of recent events, market participants now expect that the Fed may not raise interest rates so aggressively this year. According to the CME FedWatch Tool, the probability of the Fed raising the rate at the March meeting by 0.5% decreased to 3.7% from 33.7% a week earlier. Meanwhile, the odds of a 0.25% rate increase rose to 96.3% from 66.3% a week earlier. In general, market participants believe that the Fed rate will peak at 1.7%, while the Fed's long-term forecast assumes that the peak level will be 2.5%.
As for US data, today at 13:15 GMT, a report on the number of employed from ADP for February will be released. According to the forecast, the number of employed increased by 323 thousand after a decrease by 301 thousand in January.