10-year Treasury yield falls to 2.7% ahead of Fed minutes

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Treasury yields were lower on Wednesday morning as U.S. economic growth worries weighed on markets and investors expected the minutes of the Federal Reserve’s policy meeting from 3 to 4 p.m. May.

What are the yields doing
  • The performance of the 10-year Treasury note TMUBMUSD10Y,
    it was 2.738%, below 2.758% at 3pm on Tuesday.

  • The performance of the 2-year Treasury note TMUBMUSD02Y,
    was up 2.48% from 2.483% on Tuesday afternoon.

  • The yield on the 30-year Treasury bond TMUBMUSD30Y,
    was 2.97% compared to 2.971% on Tuesday afternoon.

What is driving the market

Treasury yields declined on Wednesday morning amid concerns about the prospect of US economic growth, which contributed to a renewed equity sell-off on Tuesday that pushed the S&P 500 down by 0, 8% and the Nasdaq Composite at its lowest close since November 3, 2020.

The S&P 500 SPX,
+ 0.22%
and Dow Jones Industrial Average DJIA,
+ 0.14%
are on their way to their worst first 100 trading days to start a year since 1970, while the Nasdaq Composite COMP,
+ 0.26%
is set for its worst start in history.

Data released on Wednesday showed U.S. durable goods orders rose 0.4% in April, indicating that the economy was still growing at a steady pace in early spring. Still, it was one of the weakest readings of the last seven months.

Investors continue to focus on inflation and the debate over the Federal Reserve’s ability to control price pressures without plunging the economy into recession. The central bank, which is expected to begin rolling out its balance sheet on June 1, offered a half-percentage point rate hike earlier this month following a more traditional quarter-point hike. , or 25 basis points, earlier this year. Fed officials have indicated that there are at least two more half-point increases.

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The minutes of the Fed’s May 3-4 meeting, scheduled for 2 p.m. Fed Vice President Lael Brainard is scheduled to speak at 12:15 p.m.

What analysts say

The minutes “will likely reinforce the view that additional 50 basis point hikes will be needed in the next two meetings, although the trajectory of the rate after that will become much more foggy,” said Raffi Boyadjian, an analyst at XM’s main investments, in a note.

Investors will examine policy makers’ views on how quickly they expect inflation to fall, as well as any potential revelations about the downturn, such as the possibility of selling assets directly, in particular mortgage-backed securities, “. said the analyst.

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