The Treasury bond yields 10-year bonds fell to a one-month low on Tuesday after data showed growth in the U.S. services sector slowed slightly, and as investors braced for U.S. data. employment February, which will be published on Friday.
The yield on the benchmark 10-year debt fell 8 basis points on the day, to 4.137%, and reached 4.112%, its lowest level since February 8, while that of the 2-year bonds it gave up 6 basis points, to 4.550%. The inversion of the yield curve between two-year and 10-year notes deepened by 2 basis points, to -42 basis points.
The growth of the service sector in USA slowed slightly in February, amid a decline in employment. A gauge of prices paid by businesses also fell to 58.6 from an 11-month high of 64.0 in January.
The testimony of the president of the Federal Reserve (Fed), Jerome Powellbefore him Congress On Wednesday and Thursday it will be observed for new clues.
“The services figure is the area in which the Fed is more focused,” said Ellis Phifer, managing director of fixed income research at Raymond James in Memphisto Reuters, adding that the components of the inflation and employment “are some of the most important factors.”
The drop in yields before the data also reflects investor positioning ahead of the highly anticipated U.S. Treasury report. employment on Friday. According to economists consulted by Reuters, employers created about 200,000 jobs last month.
Traders are assessing when the Fed begin to cut interest rates as the growth remains relatively strong and inflation is close to the annual target of 2%. According to the CME Group’s FedWatch tool, they see a 71% chance that the US central bank will start cutting rates in June, up from 64% on Monday.
The Federal Reserve accepted $444.47 billion in its reverse repurchase agreement operation on Tuesday. Banks and investors have been cutting the amount they lend to the company’s reverse repurchase operation. Fed as they find other securities with more attractive rates.
Source: Ambito
