The yields of the US Treasury bonds fell on Monday as traders began to price in big rate cuts from the Federal Reserveafter what employment data Weaknesses fueled fears that the U.S. economy could be heading for a downturn recession.
The yield on two-year US Treasury bonds, which is sensitive to expectations about interest rates, Federal Reserve, fell to 3.691% in European trading, its lowest level since May last year. Lastly, it was down 10 basis points (bp) at 3.77%. The yield, which moves inversely to price, also fell 53 basis points last week.
Friday’s nonfarm payrolls data, which showed the unemployment rate US stocks unexpectedly rose in July and job growth slowed, following a series of disappointing earnings results from major technology companiestriggering a global stock sell-off and driving investors into safe-haven assets.
Forecasts facing a complex scenario
The performance of the treasury bond The benchmark 10-year U.S. yield fell 5 basis points to 3.742%, after hitting a one-year low of 3.678% earlier in the session. The yield, meanwhile, sank nearly 40 basis points last week, the biggest weekly drop since March 2020.
Michael Weidner, co-head of global fixed income at Lazard Asset Management, said the rally in bond markets was being amplified by investors worried about their positions in technology stocks and by weak summer markets.
“The movement of the last two days in particular is not driven so much by fundamentals as by the correction in the stock markets “Americans,” he said. “We continue to believe that a soft landing (for the economy) is more of a baseline scenario,” he added.
Markets now anticipate around 125 basis points of rate cuts in the US this year, up from around 90 basis points on Friday and 50 basis points early last week.
For their part, the traders They now believe a 50 basis point cut in September is almost a certainty, based on derivatives market prices.
The closely watched US 2- and 10-year yield curve inverted to 2 basis points, the lowest level since July 2022, reflecting expectations of a strong flexibility of short-term returns.
How does it affect Uruguay?
In a complex scenario, where all markets are shaken by one of the worst falls in global stock markets due to fears of a recession in USA. On the other hand, at the beginning of the day, bets on the possibility of an emergency rate cut by the Federal Reserve were 60%. Since then, they have declined, but have not disappeared.
In this way, both emerging markets Uruguay like everything Latin America They are not going to make an exception. In the face of a situation of global panic, where investors are liquidating assets and selling shares to take their money to safe havens, Latin American emerging markets are never an option.
Source: Ambito
