US Treasury bond yields declined moderately, while market participants are preparing for the publication of economic data and the speech of Fed policymakers.
The yield on 5-year Treasury bonds fell by 1.3 basis points, reaching 4.513%, while the yield on 30-year bonds was 4.571% (-0.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 1.3 basis points to 4.92%, while the yield on 10-year bonds decreased to 4.465% (-1.0 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 46 basis points.
Later in the day traders will have an eye on U.S. durable goods orders, Reuters/Michigan consumer sentiment index and speeches from Fed policymakers - notably Fed Governor Christopher Waller on longer-term rates. Experts said that high financing costs and uncertainty in monetary policy continue to create an unfavorable environment for new capital investments. After the revision of the data, orders for durable goods increased by 0.9% in March. As in recent months, aircraft orders continued to play a huge role. Orders for durable goods excluding transportation remained virtually unchanged over the month. Experts expect that the situation remained the same in April. Aircraft orders are likely to have a major impact on the overall figure, as the closure of Canadian airline Lynx Air has led to massive cancellations of Boeing aircraft orders. Overall, the manufacturing sector remains under pressure. The ISM manufacturing index returned to the territory of contraction in April, which was caused by an increase in purchase prices. According to forecasts, durable goods orders fell by 0.8% m/m in April after an increase of 0.9% m/m in March.