Ekonomické zprávy

US bond yields have declined significantly

The yield of US Treasury bonds shows negative dynamics, while market participants expect the publication of new US statistical data, which may cause a reassessment of the prospects for the Fed's monetary policy.

The yield on 5-year Treasury bonds fell by 8.5 basis points, reaching 3.52%, while the yield on 30-year bonds was 3.678% (-5.1 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 7.5 basis points to 4.069%, while the yield on 10-year bonds fell to 3.447% (-6.8 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 62 basis points. Experts note that the yield on 2-year Treasury bonds is below the Fed funds rate, which historically signals that the Central Bank is nearing the end of its rate hike cycle.

Investors were thinking about what could happen next with the US economy and the policy of the Federal Reserve system ahead of the next meeting (May 2-3). In recent weeks, Fed policymakers have indicated that rates could rise even higher and stay at this level longer to lower inflation. According to the CME FedWatch Tool, markets see an 86% chance of another 25 basis point rate hike at the Fed's May meeting.

Today, the market participants will focus on new home sales data for March and consumer confidence index for April. Consensus estimates suggest that new home sales fell to 0.63 million from 0.64 million in February, and the consumer confidence index fell to 104.0 from 104.2 in March.

On Thursday, the U.S. Department of Commerce will release its preliminary estimate of GDP for the first quarter, while the Commerce Department will release weekly statistics on applications for unemployment benefits. On Friday, the core personal consumption expenditure price index (PCE), the Fed's preferred inflation indicator, will be released.

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