Saturday, September 23, 2023

US two-year returns rise ahead of next week’s Fed meeting

by Herbert Lash

NEW YORK, June 6 (Reuters) – Two-year Treasury yields rose on Tuesday as markets awaited the release of key consumer price data next week followed by a Federal Reserve meeting, with futures traders expecting the central bank to cut interest rates. Will stop increasing rates.

* The two-year yield, which moves in step with interest rate expectations, rose 3.3 basis points to 4.516%, while the 10-year yield stood at 3.693%.

* On Tuesday, the Reserve Bank of Australia (RBA) raised rates by a quarter point to 4.1%, its highest level in 11 years. The Australian central bank has warned that more monetary tightening may be needed to bring inflation back to its target.

* The RBA move was a bit of a surprise, but because of US debt ceiling concerns, people are more focused on next week than this week, said Mike Schumacher, chief macro strategist at Wells Fargo in New York.

* On June 13 the Labor Department will publish the Consumer Price Index (CPI) for May, a day before the Federal Reserve decides whether to keep the cost of credit in the 5%-5.25% range. This is the first time since March 2022 that the US central bank will not raise rates.

Fed funds futures show a 79.4% probability that the Fed will hold the cost of money steady, according to CME Group’s FedWatch tool.

* Markets are waiting for the Treasury Department to issue $1 trillion in short-term bills to replenish cash reserves depleted during the impasse in Congress over raising the debt ceiling.

* The 30-year yield fell 2.3 basis points to 3.917%.

* The Treasury yield curve inversion spread, a bearish harbinger when short-term debt outperforms long-term debt, stood at -82.7 basis points.

(Reporting by Herbert Lash; Editing in Spanish by Manuel Farias)

World Nation News Desk
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