Treasuries extend rally as traders weigh future direction of monetary policy

U.S. government debt continued to rise on Wednesday as traders narrowed their bets on an aggressive series of interest rate hikes from the Federal Reserve this year.

The two-year Treasury yield, which was very sensitive to monetary policy expectations, fell 0.14 percentage points to 2.27 percent, its lowest level this month. Yields fall as prices rise.

It later became part of the move to trade at 2.35%, down 0.06 percentage points per day.

Futures markets show that investors are now expecting the Fed to raise interest rates by another 2 percentage points by the end of the year, down a quarter of a percentage point from earlier this week.

The moves came after Tuesday’s US consumer price data showed that “core” inflation was closely watched, eliminating volatile energy and food prices, slowing unexpectedly in March. Annual headline figure Rose 8.5 percentSlightly above analysts’ expectations.

“Everyone seems to think inflation is peaking. So people are actually shortening lessons,” said Eric Payne, portfolio manager at VanEck.

The yield on the 10-year Treasury bill fell by 0.03 percentage points to 2.69%.

“The big news in March [inflation] The report was that half-core prices were finally seen to moderate, “said Andrew Hunter, a senior economist at Capital Economics, adding that a shortage of goods supplies and congestion at ports are showing signs of relief.

Energy prices, a crucial driver of inflation, were expected to fall over the rest of the year, he added. But he said the Fed is not expected to deviate from its broad plan to raise interest rates by 0.5 percentage points at its May meeting.

“After being late in realizing that the initial wave would not have passed, Fed officials are a little too pessimistic about the rate at which inflation will fall back,” Hunter said.

Quarterly data showed U.S. producer prices last month rose at an annual rate of 11.2%, well above economists’ expectations.

The change in interest rate expectations has also lifted stock markets, especially high-growth technology stocks that are considered particularly vulnerable to price increases. The US S&P 500 added 1.1%, while the high-tech Nasdaq Composite rose 2%.

The bank’s earnings season, JPMorgan Chase, begins on Wednesday Reported a 42% decrease in net income compared to a year ago In the first quarter, following a slowdown in transactions, an increase in reserves to protect against a recession in the US and a loss of $ 524 million suffered against the background of the market storm following Russia’s invasion of Ukraine. The bank’s share fell by 3.2%.

Black Rock was more successfulRecorded $ 1.46 billion in adjusted net income in the first quarter, close to one-fifth compared to the same period last year.

In Europe, the regional stock index of the Stoxx 600 closed the meeting permanently. The German Dax was down 0.3% and the French Cac 40 was up 0.1%. The London FTSE 100 added 0.1%.

The data on Wednesday showed Inflation in the UK Rose to a new 30-year high last month, led by rising fuel costs. Consumer prices rose by 7% compared to the year in March, compared to 6.2% in the previous month. Economists surveyed by Reuters expected prices to rise by 6.7%.

Martin Beck, EY Item Club’s chief economic adviser, predicted prices would peak at 8.5% in April before cooling later this year, with energy prices and bottlenecks in the supply chain easing.

Oil prices rose on Wednesday as Brent international oil rose 4 percent to $ 108.78 a barrel.

In Asia, Hong Kong’s Hang Seng Index rose 0.3% and China’s CSI 300 fell 1%. The Japanese Topix rose 1.4 percent and the South Korean cosplay rose 1.9 percent.

Treasuries extend rally as traders weigh future direction of monetary policy Source link Treasuries extend rally as traders weigh future direction of monetary policy

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