On Wednesday, U.S. Treasury yields rose as investors analyzed the latest economic data and considered the overall state of the economy. The 10-year Treasury yield had increased by more than two basis points to 4.6273%, while the 2-year Treasury yield was more than three basis points higher at 4.9414%. Yields and prices have an inverse relationship, with one basis point equivalent to 0.01%.
Investors were closely examining economic indicators amidst uncertainty about the economy’s condition and its potential impact on Federal Reserve monetary policy decisions. Recent economic data has demonstrated resilience in the economy despite high interest rates and ongoing inflation. Expectations for Fed interest rate cuts have shifted, raising questions about whether there will be fewer cuts than previously anticipated this year.
On Tuesday, the S&P Global Flash manufacturing PMI for the U.S. dropped to a four-month low of 49.9 for April, signaling contraction in the sector. This data implied to investors that the economy might be experiencing a slight slowdown, adding to their concerns about monetary policy decisions and future growth prospects.
Additional economic data is expected later in the week, including durable goods orders, a first-quarter GDP reading, and the personal consumption expenditures price index. This data precedes the Fed’s upcoming meeting on April 30-May 1, where it is widely anticipated that rates will remain unchanged due to recent positive economic developments and caution expressed by Fed officials in discussing a timeline for rate cuts in recent weeks.
Overall, investors are closely monitoring economic trends and Fed policy decisions as they seek to navigate market fluctuations and optimize their investment strategies in light of current conditions.