The United States Federal Reserve (Fed) will wait until September before starting to trim the interest ratestraders estimated on Wednesday, after a government report showed that inflation exceeded market projections last month for the third consecutive month.
Short-term rate futures in USA They plummeted after the report, which showed the core consumer price index rose 0.4% in March from February and 3.8% year-on-year.
The Fed It points to 2% inflation and traders are betting that the latest reading is too high for authorities to cut in June, as they expected before the report, or even before the US central bank meeting at the end of July.
Traders are also betting that the Fed will only cut rates twice this year, less than the cuts they had been pricing in before and that monetary authorities had signaled in March as likely.
US Treasury bond yields rise
The returns of the United States Treasury bonds spiked on Wednesday after data from inflation were higher than expected, lifting the benchmark 10-year yield more than 10 basis points to 4.5%, its highest level since November last year.
Consumer prices in USA They rose more than expected in March, due to increases in gasoline and housing costs, casting further doubt on whether the Federal Reserve will begin cutting interest rates in June.
Two-year bond yields, which more closely reflect monetary policy expectations, rose nearly 20 basis points, later trading at 4.937%, also their highest level since November.
Fund futures traders Federal Reserve They reduced their expectations for interest rate cuts to a total of 43 basis points by 2024, down from 67 points prior to the inflation data.
The consumer price index rose 0.4% last month, after advancing the same margin in February, the Bureau of Labor Statistics (BLS) of the Department of Labor. In the 12 months to March, the CPI rose 3.5%.
Economists consulted by Reuters had predicted that the CPI rose 0.3% in the month and 3.4% in interannual terms.
The first test of investors’ appetite for Treasury bonds will come Wednesday, when the government auctions $39 billion in 10-year bills.
Source: Ambito
