U.S. 10-Year Treasury Yield Remains Below 4% Ahead of Data and Bank Results

What’s Happening

The yield on the 2-year Treasury is currently at 4.27%, experiencing an increase of 1.2 basis points. On the other hand, the yield on the 10-year Treasury is at 3.98%, up by 1.3 basis points. Lastly, the yield on the 30-year Treasury stands at 4.19%, with a rise of 1.5 basis points.

What’s Driving Markets

Recent data that revealed slightly stronger-than-expected U.S. consumer prices is raising doubts about the possibility of the Federal Reserve initiating an interest rate cut in March. Cleveland Federal Reserve President Loretta Mester added to these doubts with her comment. Societe Generale strategists, led by Kenneth Broux, state that the stronger headline Consumer Price Index (CPI), mainly driven by a substantial increase in rents and other services, has caused the 10-year U.S. Treasury (UST) yields to stagnate at 4%. The reaction in the bond and foreign exchange markets has been relatively muted, indicating that unless there is a shift in incoming data, we may remain in a state of uncertainty with narrow trading ranges for some time.

What to Expect

Friday’s session will include Producer Price Index (PPI) data and the publication of financial results from major banks such as JPMorgan Chase, Bank of America, and Citi.

Oil Futures Rise

Following air strikes launched by the U.S. and the U.K. on Houthi targets in response to attacks on ships in the Red Sea, oil futures have seen an increase of +3.19%. This development adds further complexity to the inflation picture.

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