10-year Treasury yield holds steady at 2.75% as investors assess GDP data and jobless claims

Treasury yields changed on Thursday morning after revised data showed that the US economy contracted at an annual rate 1.5% deeper than expected in the first quarter, all and that weekly unemployment claims reflect a labor market that is still strong.

What are the yields doing
  • The performance of the 10-year Treasury note TMUBMUSD 10Y,
    it was up 2.751% from 2.746% at 3pm on Wednesday.

  • The performance of the 2-year Treasury note TMUBMUSD02Y,
    was up 2.436% from 2.50% Wednesday afternoon.

  • The yield on 30-year Treasury bonds TMUBMUSD 30Y,
    it was 2.991% compared to 2.965% on Wednesday afternoon.

What is driving the market

Revised data released on Thursday show that the US economy contracted at an annual rate 1.5% deeper than expected during the first quarter, largely due to a record trade deficit . This compares to a previously estimated drop of 1.4%. Business profits fell for the first time in five quarters.

Meanwhile, U.S. jobless claims fell by 8,000 last week to 210,000, indicating that layoffs remain extremely low. Economists polled by The Wall Street Journal expected claims totaling 215,000 in the seven days ending May 21.

Concerns about U.S. growth have caused Treasury yields to fall short of the highs set earlier this month, when the 10-year rate briefly exceeded 3.2% to trade at an intraday high of about 3 1/2 year. Yields had risen sharply for much of this year, as investors focused on inflation and the Federal Reserve’s ability to control price pressures without plunging the economy into recession.

The Fed, which will begin rolling out its balance sheet on June 1, offered a half-percentage point increase on May 4 after a more traditional quarter-point rise, or 25 basis points. earlier this year. Fed officials had previously indicated that there were at least two more half-point increases.

Treasury to auction $ 42 billion in 7-year banknotes TMUBMUSD07Y,

Friday will take a look at the Fed’s preferred inflation indicator, the reading of core inflation in personal consumption spending.

What analysts say

“The fall in profits is a reminder that while most economists, including Fed staff and FOMC participants, rejected the contraction of the economy as abnormal or caused by often volatile or unimportant factors, no however it was real, “said Chris Low, chief. economist at FHN Financial. “The fall in corporate profits underscores the reality of falling production. It reflected a slowdown in investment in inventories and a weakness abroad, but it was still real enough to undermine profitability.”

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