Treasury yields rose on Monday as investors prepared for a Federal Reserve meeting that is expected to produce a disproportionate rate hike and announce the start of the relaxation of the central bank’s balance sheet.
What do yields do?
The performance of the 10-year Treasury note TMUBMUSD10Y,
it was 2.941%, up from 2.855% at 3pm on Friday. Debt yields and prices move opposite each other.
The performance of the 2-year Treasury note TMUBMUSD02Y,
was up 2.732% from 2.696% on Friday afternoon.
The yield on the 30-year Treasury bond TMUBMUSD30Y,
traded at 3% to 2.945% on Friday afternoon.
The continued liquidation of the Treasury saw 10-year yields rise 56.1 basis points in April, the largest monthly rise since December 2009, according to Dow Jones Market Data. The 2-year yield rose 41.2 basis points, its ninth consecutive monthly increase, while the 30-year rate rose 50.1 basis points for its biggest increase since January 2009.
What is driving the market?
Fed officials will conclude a two-day meeting on Wednesday afternoon. Investors widely expect the central bank to raise the rate of fed funds by 50 basis points, or half a percentage point, instead of making the typical quarter-point move. Investors have also been judging whether there are likely to be more large-scale moves in the coming policy meetings.
Reads: The Fed’s half-point interest rate hike next week is seen in the oven
The Fed is also expected to announce the liquidation of its balance sheet.
Monday’s data includes the final April reading of S&P Global’s U.S. Manufacturing Purchasing Managers Index at 9:45 a.m. East.
The Institute for Supply Management’s April manufacturing index is due to be presented at 10 a.m. Economists polled by The Wall Street Journal expect it to rise to 57.8% from March 57.1. A reading of more than 50% indicates an expansion of the activity. March construction spending data is also released at 10 p.m.
What do analysts say?
“There doesn’t seem to be much room for [Fed Chairman Jerome] Powell to surprise by the hawk side. However, harsh comments on recent wage developments could lead to market speculation about a 75 [basis point] rate hike at one of the next FOMC meetings, “UniCredit economists wrote in a note.
“If a 75 bp rate hike becomes a viable option after this week’s FOMC meeting, the fixed and equity markets are likely to be on another wild ride for the next few days,” they said. to say.