The yield on US Treasury bonds declined moderately, while market participants continued to evaluate the minutes of the May meeting of the Federal Reserve System.
The yield on 5-year Treasury bonds fell by 4.2 basis points, reaching 2.674%, while the yield on 30-year bonds was 2.948% (-1.7 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 4.2 basis points to 2.46%, while the yield on 10-year bonds fell to 2.715% (-3.2 basis points).
The minutes published yesterday showed that at the Fed's May meeting, the possibility of raising rates to a level high enough to deliberately slow down economic growth was discussed. "The participants of the meeting considered it important to act quickly to change monetary policy towards a neutral one. They also admitted that a restrictive policy may become necessary," the minutes showed. The document also noted that many participants admitted the appropriateness of raising the rate by 50 basis points at the next two meetings. Overall, the minutes of the Fed's May meeting were much less hawkish than the market expected.
Market participants are also preparing for the publication of important US data: at 12:30 GMT, a report on GDP for the 1st quarter will be released (economists expected a decline by 1.3% in quarterly terms), as well as a report on the number of initial applications for unemployment benefits over the past week (consensus estimates suggest that the number of initial applications decreased to 215 thousand compared to 218 thousand a week earlier). Meanwhile, at 14:00 GMT, the United States will announce a change in pending home sales for April. Economists expect that the indicator decreased by 1.9%.