US Treasury bond yields mostly rose, but only slightly, while market participants took a wait-and-see attitude ahead of the publication of economic data and the speech of Fed policymakers.
The yield on 5-year Treasury bonds rose by 0.4 basis points, reaching 4.445%, while the yield on 30-year bonds was 4.569% (+0.8 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 0.5 basis points to 4.82%, while the yield on 10-year bonds rose to 4.426% (+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.
As for the US economic data, reports on the housing market and statistics on durable goods orders will be presented this week. Market participants will also focus on the minutes of the Fed's May meeting, which may contain new clues about the timing of the Fed's monetary policy easing. Investors are also hoping for clues about when and how often rates may be cut this year from policymakers, several of whom are expected to speak throughout the week, including on Monday. Earlier, the Central Bank said that interest rates will not decrease until policymakers gain more confidence in returning inflation to the target level of 2%. According to the CME FedWatch Tool, markets see a 9.1% probability of a 25 basis point rate cut at the Fed meeting in June, a 27.9% probability of a rate cut in July, and a 65.4% probability of monetary policy easing in September.