The yield on US Treasury bonds rose slightly, while market participants are preparing for the release of important US data that may affect the Fed's further actions.
The yield on 5-year Treasury bonds rose by 1.4 basis points, reaching 4.585%, while the yield on 30-year bonds was 4.689% (+0.4 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 2.3 basis points to 4.952%, while the yield on 10-year bonds increased to 4.56% (+0.6 basis points). The curve between the 10-year Treasury yield and the 2-year yield remains inverted, sending a warning that the economy may be falling or has already fallen into recession. Now the gap between 10 and 2 year U.S. debt is 39 basis points.
The key event of today's session will be the publication of the U.S. core personal consumption expenditures (PCE) price index data, the Fed's preferred measure for inflation. Economists said that despite the shaky confidence, the household sector continues to show resilience. Consumer spending in March was higher than expected amid a slowdown in real disposable income growth. To make ends meet, the personal savings rate has fallen since the start of the year and is now at a historically low 3.2%. The increased cost of borrowing has slowed the pace of consumer credit growth, but the steady rise in credit card debt and the low savings rate suggest that consumers are doing everything they can to keep spending. After an increase of 0.8% in February and March, personal spending is expected to show a more modest increase in April (+0.3%). Retail sales did not change during the month, as Easter came earlier than usual, and some expenses had to be postponed to March. As for income, it is predicted that their growth has also slowed down - to 0.3% from 0.5% in March. Meanwhile, according to forecasts, the core PCE price index rose 0.3% after a similar increase in March. Experts warn that higher-than-expected figures may further reduce the likelihood of the Fed easing monetary policy this year. CME Group’s FedWatch tool last showed that traders were not pricing in rate cuts for the Fed’s June or July meeting, and chances of a cut in September were at 48,7%.