Usually, US bond yields have fallen from session highsbut the way they have traded since the Fed’s policy meeting last week suggests rates may have peaked for now as the economy loses momentum.
Data released on Monday showed US manufacturing activity slowed less than expected in July.with the national factory activity index from the Institute of Management and Supply (ISM) falling to 52.8 last month, the lowest reading since June 2020.
The ISM PMI index stood at 53.0 in June, with a gauge of prices paid for inputs by factories falling to a two-year low, suggesting inflation has likely peaked.
Construction spending also decreased in June, by 1.1%as outlays on single-family home construction fell sharply in the face of rising mortgage rates.
In the past week, The Fed made its second consecutive rate hike of 75 basis points.but central bank Chairman Jerome Powell said the bank could slow the rate of hikes in coming months if there is evidence that tighter monetary policy is bringing the country’s worst inflation in four decades under control.
The 10-year yield fell almost 4 basis points to 2.6%, after touching 2.5%, the lowest level since early April. Since hitting an 11-year high of 3.5% in mid-June, the return has fallen by more than 90 basis points.
The two-year yield, which generally follows interest rate expectations, it remained stable at 2.9%.
A closely followed portion of the yield curve, which measures the gap between two- and 10-year notes, traded inverted at -30.6 basis points. An inversion of this yield curve often heralds a recession.
Source: Ambito
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