The yield on US Treasury bonds rose slightly, while investors are trying to predict the Fed's next steps.
The yield on 5-year Treasury bonds grew by 1.9 basis points, reaching 4.192%, while the yield on 30-year bonds was 3.943% (+2.4 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 1.2 basis points to 4.805%, while the yield on 10-year bonds increased to 3.941% (+1.9 basis points). The curve between the 10-year Treasury yield and the 2-year yield remains inverted, sending a warning that the economy may be falling or has already fallen into recession. Now the gap between 10 and 2 year U.S. debt is 86 basis points.
Recent strong US data have reinforced expectations that the Fed will have to raise interest rates more than initially expected and keep them high for a longer time. Meanwhile, Fed Governor Philip Jefferson said on Monday that he was under "no illusion" that inflation would return quickly to the U.S. central bank's target. Traders now expect the Fed to raise interest rates to about 5.4% by the September meeting. At the beginning of February, they assumed that rates would peak around 4.9%.
Meanwhile, today investors will focus on data such as Chicago purchasing managers' index and consumer confidence index, which can provide clues about the prospects for the US economy, as well as the impact of high inflation on companies and consumers. Experts expect that in February the consumer confidence index rose to 108.5 from 107.1 in January.