Bond yields on Thursday were largely steady, as investors looked ahead of readings on the economy and inflation after what could have been the final U.S. interest-rate hike of the cycle.
What’s happening
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was 4.84%, down 1.7 basis points. Yields move in the opposite direction to prices. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 3.88%, up 1.1 basis points. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 3.95%, up 1.3 basis points.
What’s driving markets
On Wednesday, the Fed took rates to a range between 5.25% and 5.5% that financial markets expect to be the peak of the cycle.
“My summation would be that the Federal Reserve should be done, but we still need to keep an eye on rekindling energy and commodity prices, as well as that core inflation number,” said Clifford Bennett, chief economist at ACY Securities.
David Mericle, an economist at Goldman Sachs, says the Fed is done. “[Chair Jerome] Powell said that the FOMC will be particularly focused on the inflation data, and we expect the next few CPI reports to be soft. As a result, we expect that the FOMC will skip September in order to slow the pace and will then conclude in November that inflation has slowed enough to make a final hike unnecessary,” he said.
Ahead of key U.S. inflation data on Friday, there’s a bevy of reports including second-quarter GDP, weekly jobless claims, durable-goods orders and the trade balance in goods, as well as a rate decision from the European Central Bank.
Friday may be the more eventful day on the economic calendar, with the PCE price index, the employment cost index and a Bank of Japan rate decision coming.
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