The new rise in the rate hit the New York Stock Exchange, which closed clearly in the red on Monday. At the closing bell, the Dow Jones lost 1.2% to 34,309.07 points; the technological Nasdaq yielded 2.2% to 13,411.96 units and the S&P 500 1.7% to 4,412.60.
Markets brace for Tuesday’s reading of the Consumer Price Index (CPI) for March, with expectations of an 8.4% year-on-year rise, according to Reuters estimates. The data for February, which showed an increase of 7.9%, was the highest in 40 years. On Wednesday the Producer Price Index (IPP) will be released.
“They definitely expect to see an inflation spike, but I don’t think they expect to see it this week – they probably need another month or so,” said Jim Barnes, director of fixed income at Bryn Mawr Trust. “In some of the data, you’re starting to see a pass-through of some key variables, but there have been some powerful influences combining to keep pushing this higher.”
By afternoon in New York, the yield on 10-year notes rose 6.5 basis points to 2.780%, after rising to 2.793%, its highest level since January 2019. It was headed for its seventh straight rise.
Fed officials have stressed the need for the central bank to be more aggressive in taking steps to combat high inflation, including raising rates. On Monday, Chicago Fed Chief Charles Evans indicated he would not object to raising interest rates to a neutral level of 2.25% to 2.5% by the end of the year, which would require increases of 50 basic points in a couple of upcoming meetings.
The return on 30-year paper gained 7.4 basis points to 2.820%, after hitting 2.836%, its highest since May 2019.
The yield curve that measures the gap between the return on two-year and 10-year debt, seen as an indicator of economic expectations, traded at 27.2 basis points. The spread has started to rise again after briefly reversing in late March, which is seen by many as a reliable indicator of a recession.
The yield on two-year notes, which typically moves in step with interest rate expectations, fell 1.4 basis points to 2.506%.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
