Economic news
11.09.2024

US bond yields are showing negative dynamics

Treasury bond yields declined moderately, while market participants are cautious ahead of the publication of US inflation data, which may affect the results of the Fed's September meeting.

The yield on 5-year Treasury bonds fell by 3.7 basis points, reaching 3.391%, while the yield on 30-year bonds was 3.927% (-2.7 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 4.4 basis points to 3.565%, while the yield on 10-year bonds fell to 3.609% (-3.5 basis points).

Investors are now keenly awaiting August's consumer price index, set to be published at 12:30 GMT. If inflation figures turn out to be higher than expected, this will probably completely eliminate the possibility of a more significant reduction in interest rates by the Fed in September. Conversely, lower values will strengthen bets on a sharp decline in interest rates.  According to the CME FedWatch Tool, markets see a 35% probability of a 0.5% rate cut in September (down from 44% the week before), and a 65% probability of a 0.25% rate cut (up from 56% the week before). Some analysts argue that a 0.5% rate cut will show the Fed's commitment to supporting job growth, while others argue that it would be an unnecessary step that could sow panic in the market.

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