Tag Archives: Economic outlook

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U.S. Treasurys as traders look to PPI inflation data

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Treasury yields fell on Tuesday as markets awaited the release of October’s producer price index figures and digested U.S. Federal Reserve speaker commentary.

At around 4:20 a.m. ET, the yield on the benchmark 10-year Treasury was down by around three basis points to 3.8367%. The 2-year Treasury yield was last at 4.3677% after declining by four basis points.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

Traders looked ahead to the latest PPI figures which are due later in the day. The PPI reflects wholesale inflation by measuring how prices paid to producers for goods and services develop.

Markets are hoping that the data will provide more clarity on whether overall inflation is cooling, after consumer inflation figures released on Thursday hinted at this.

Fed Governor Christopher Waller suggested on Monday that last week’s data was only part of the bigger picture and other data points would have to be considered before drawing any conclusions.

He also indicated that the Fed would consider slowing rate hikes, but a pause to them is not imminent.

Federal Reserve Vice Chair Lael Brainard also hinted at a potential slowdown of rate hikes in remarks made on Monday.

Investors have been following Fed speaker comments closely as uncertainty about the central bank’s future policy and concerns about the pace of rate hikes leading the U.S economy into a recession have continued.

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Bond yields higher following market slumps, job data

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U.S. Treasury yields traded higher on Tuesday as investors digested Monday’s market retreat and the previous week’s data releases that will guide the Federal Reserve’s policymaking.

The yield on the benchmark 10-year Treasury note rose 6 basis points, trading at 3.9531% at around 5:30 a.m. ET. The yield on the 30-year Treasury bond climbed 7 basis points to 3.9173%. Yields move inversely to prices, and a basis point is equal to 0.01%.

The yield on the 2-year Treasury, the part of the curve most sensitive to Fed policy, was up by 2 basis points to 4.3329%.

The retreat from U.S. bonds appears to be picking up pace as commercial banks, pension funds and foreign governments step away, and the Fed increases the pace at which it plans to sell treasuries from its balance sheet. U.K. bonds are also seeing a dramatic slump as the Bank of England’s emergency move to purchase more gilts failed to calm markets.

Investors will be looking out for the data release on the NFIB (National Federation of Independent Business) Small Business Optimism Index on Tuesday, after the previous week’s release showed an unexpected decline in job openings, slower job growth than forecast and a lower-than-predicted unemployment rate.

The previously released data suggested a continued path of rate hiking for the Fed, which has contributed to recent days’ slides in the stock market.

The New York Fed will release its Survey of Consumer Expectations, which provides a look into consumer’s expectations for overall inflation and prices of food, housing and energy, as well as outlooks on earnings and jobs.

13-week and 26-week bonds are also due for auction Tuesday.

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Treasury yields tumble for a second day, with 10-year rate below 3.6%

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Treasury yields fell across the board for a second day Tuesday as traders weigh actions from central banks going forward.

The benchmark 10-year Treasury was down 6 basis points to 3.587%, after having surpassed the 4% mark last week. The yield on the policy-sensitive 2-year Treasury fell 5 basis points to 4.045%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

The moves appeared to be helping the stock market, as futures traded sharply higher Tuesday. Stocks also rallied Monday.

Markets also continued to absorb the unexpected decline of the U.S. Purchasing Managers’ Index data for the manufacturing sector, which measures factory activity.

That comes as the Federal Reserve maintains a hawkish tone about interest rates hikes, with speakers from the central bank emphasizing that lowering persistent inflation is a top priority for them.

Various Fed speakers are due to make remarks on Tuesday, which traders will pay close attention to in light of growing fears of a recession brought on by rate hikes being implemented too quickly.

Tuesday will also bring insights into the labor market as job openings data for August is released.  

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10-year Treasury yield falls as markets digest Fed rate hike

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The yield on the benchmark 10-year Treasury fell on Friday as markets adjusted to the Federal Reserve’s interest rate hike and attention turned toward flash PMI (Purchasing Managers’ Index) data for September that is due to be released later in the day.

The 10-year Treasury note last traded at 3.6946%, down 1 basis point as of 4:12 a.m. ET. It had hit an over 11-year high on Thursday, rising to above 3.71% after gaining almost 20 basis points.

The policy-sensitive 2-year Treasury continued to hover around 4.1% after having risen off the back of the Federal Reserve’s interest rate hike. On Thursday, it had soared as high as 4.163% — a level not seen since October 2007.

Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.

September flash PMI data is set to be released on Friday, giving markets preliminary insight into the economic state of the manufacturing and services industries for the month. PMI data is used as a key indicator for inflation and recession concerns as it reflects whether industries are growing or shrinking, as well as supply and demand.

Analysts are expecting the services sector to inch higher after contracting sharply in August. Meanwhile, growth in the manufacturing industry is set to drop, after slowing down close to 2020 levels last month.

Markets are also digesting the Federal Reserve’s 75 basis point interest rate hike that was announced on Wednesday as the central bank tries to curb inflation. Federal Reserve chairman Jerome Powell is set to give a speech with further insights on Friday.

 

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Business

Investors look ahead to Jackson Hole

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U.S. Treasury yields moved lower on Monday as investors looked ahead to the Jackson Hole economic symposium.

The yield on the benchmark 10-year Treasury note was down about 4 basis points at 2.9482% at 3:25 a.m. ET, while the yield on the 30-year Treasury bond traded lower by 3 basis points to 3.1937%. Yields move inversely to prices, and a basis point is equal to 0.01%.

The yield on the short-term 2-year Treasury note also traded marginally lower at 3.2467%.

Those moves come ahead of what could be a volatile week of trading. Investors are anticipating U.S. Federal Reserve Chairman Jerome Powell’s latest comments on inflation at the central bank’s annual Jackson Hole economic symposium.

Yields fell and then rose at the end of last week as markets mulled over the Fed’s released July meeting minutes. The Fed indicated that it would continue hiking rates until inflation slows down significantly, although the central bank could soon decrease its pace of tightening.

There are no major economic data releases due on Monday. The Treasury will auction $54 billion worth of 13-week bills on Monday and $42 billion worth of 26-week bills.

— CNBC’s Sarah Min and Samantha Subin contributed to this article.

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Treasury yields ahead of release of key inflation data

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U.S. Treasury yields ticked downward on Tuesday as traders prepared for key inflation figures due out later this week.

The 2-year dropped 6 basis points to trade at 3.0078% but remained above the 10-year Treasury, which dropped 6 basis points to 2.9225%, dropping back below the 3% mark. The yield on the 30-year Treasury bond traded 5 basis points lower at 3.1257%. Yields move inversely to prices, and a basis point is equal to 0.01%.

Markets are awaiting key inflation data this week. June’s consumer price index, scheduled for release Wednesday, is forecast to show headline inflation rising above May’s 8.6% level. That inflation figure also applies to energy and food.

All three major U.S. stock indexes closed in negative territory Monday.

The National Federation of Independent Business optimism index for June, which focuses on small businesses, is set to be published Tuesday, as is the IBD/TIPP Economic Optimism Index, which is the earliest monthly survey of consumer confidence.

The U.S. will also be releasing its Redbook for July, a sales-weighted record of year-on-year growth among a selection of large retailers representing some 9,000 stores. The 52-week bill is set for auction Tuesday.

Friday’s June employment report showed jobs growing at a faster rate than expected. Nonfarm payrolls increased 372,000 last month, according to the Bureau of Labor Statistics. Economists predicted the U.S. economy would add 250,000 jobs, according to the Dow Jones.

President Joe Biden is beginning his Middle East trip, which will include a visit to Saudi Arabia and meetings with OPEC leaders in an effort to push for higher oil production to ease prices.

U.S. Treasury Secretary Janet Yellen will meet with Japanese Finance Minister Shunichi Suzuki on Tuesday to discuss further sanctions against Russia for its war in Ukraine.

Gold hit its lowest level since late September as the dollar reached a two-decade high, trading at $1,732.40 per ounce at 8:30 a.m. in London.

On Friday, yields had jumped following the jobs report, on the assumption that the U.S. Federal Reserve will be more aggressive with its rate-hiking path.

—CNBC’s Samantha Subin and Matt Clinch contributed to this report.

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Treasury yields dip as economic slowdown fears mount

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U.S. Treasury yields dipped on Tuesday morning, with investor focus remaining on the Covid-19 outbreak in China and concerns over a global economic slowdown.

The yield on the benchmark 10-year Treasury note fell under a basis point to 2.8335% at 3:45 a.m. ET. The yield on the 30-year Treasury bond moved less than basis point lower to 2.9048%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasury yields slumped on Monday, along with a sell-off in stock markets. This came on the back of concerns that a Covid-19 breakout in Beijing, China, could see a lockdown and slow economic growth in the region.

Beijing announced late Monday that it would be expanding mass testing for the virus.

The potential drag on economic growth from higher inflation and rising interest rates also remains a concern for investors.

David Pierce, managing director at GPS Capital Markets, told CNBC’s “Squawk Box Europe” on Tuesday that he believed the Federal Reserve would hike interest rates by 50 basis points at both of the next two policy meetings.

However, Pierce said these hikes could “really precipitate a turnaround in the economy and slow things down so much so that they might have to back those off very quickly — it is a really volatile situation right now.”

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In terms of economic data releases due out on Tuesday, March’s durable goods order numbers are set to come out at 8:30 a.m. ET.

The S&P/Case-Shiller February home price index is expected to be out at 9 a.m. ET.

March’s new home sales data and the CB April consumer confidence index are slated for release at 10 a.m. ET.

Developments in the Russia-Ukraine war also continue to be a focus for investors. At a high-level meeting in Kyiv on Sunday, the U.S. pledged just over $700 million in military financing to help Ukraine and other allied countries in central and eastern Europe involved in the war effort.

The U.S. State Department approved a potential sale of $165 million in ammunition to Ukraine.

Meanwhile, an auction is scheduled to be held on Tuesday for $48 billion of 2-year notes.

— CNBC.com staff contributed to this market report.

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Treasury yield touches 2.91%, a level not seen since late 2018

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U.S. Treasury yields rose Tuesday, as traders fret over concerns of rising inflation and tighter monetary policy.

The yield on the benchmark 10-year Treasury note briefly touched 2.91%, reaching levels not seen since late 2018. The benchmark rate later eased from those levels, trading at around 2.886% at 6 a.m. ET.

The yield on the 30-year Treasury bond fell less a basis point to 2.9512%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Concerns around rising inflation and its effect on economic growth has seen investors sell out of bonds over the past couple of months, pushing up yields.

Data released last week showed consumer and producer prices continued to rise in March, fueling investor beliefs that the Federal Reserve could increase the size of its interest rate hikes, in a bid to control this inflation.

St. Louis Fed president James Bullard told CNBC’s Steve Liesman on Monday that “quite a bit has been priced in” in terms of Fed actions.

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The Russia-Ukraine war has exacerbated pricing pressures. The World Bank said Monday that it had cut its annual global growth forecast for 2022 from 4.1% to 3.2%.

The Ukrainian military says Russia’s long-expected offensive push into eastern Ukraine has started, with intensified assaults Monday in the Slobozhansky and Donetsk operational districts in the north and east of the country.

March’s building permits and housing starts numbers are set to be released at 8:30 a.m. ET on Tuesday.

— CNBC.com staff contributed to this market report.

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Treasury yields rise ahead of key inflation report

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The 10-year U.S. Treasury yield hit 2.82% on Tuesday morning, its highest point since December 2018.

The yield on the benchmark 10-year Treasury note rose 3 basis points to 2.8205% at 4:15 a.m. ET. The yield on the 30-year Treasury bond moved 1 basis point higher to 2.8353%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

The spike in the 10-year rate comes ahead of key inflation data.

March’s consumer price index is due out at 8:30 a.m. ET on Tuesday. The data is expected to show an 8.4% annual increase in prices — the highest level since December 1981 — according to economists polled by Dow Jones, with rising food costs, rents and energy prices expected to be the main contributors to the spike.

The March producer price index is due out at 8:30 a.m. ET on Wednesday.

These inflation readings are key in determining how aggressive the Federal Reserve will be in tightening monetary policy.

Rising prices and a more hawkish Fed have given rise to investor fears that a recession may be on the horizon, as seen in the inversion of bond yields. Investors have been selling out of shorter-dated Treasurys in favor of longer-dated debt, indicating their concerns about the near-term strength of the economy, though rates had reverted on Tuesday.

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Nigel Bolton, co-chief investment officer at BlackRock Fundamental Equities, told CNBC’s “Squawk Box Europe” on Tuesday that increased market volatility reflected concerns about central banks making “policy mistakes and that rolls over into global recession that’s 12 to 18 months out.”

However, Bolton said he didn’t think a recession was “definitely on the cards.” 

Fed Governor Lael Brainard is due to speak at the Wall Street Journal Jobs Summit at 12:10 p.m. ET on Tuesday.

In addition to inflation data, the April IBD/TIPP economic optimism index is due out at 10 a.m. ET on Tuesday.

An auction is scheduled to be held on Tuesday for $34 billion of 10-year notes.

— Samantha Subin contributed to this market report.

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10-year Treasury yield rises above 2.6% after Brainard speech

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The 10-year Treasury rose Wednesday to levels not seen since 2019, as investors weighed remarks from Federal Reserve Governor Lael Brainard and awaited the latest insights into the central bank’s policy tightening.

The benchmark rate traded around 2.67%, near its highest level since March 2019, as it stages a massive two-day jump. The 10-year closed Monday at around 2.4%.

Wednesday’s move put the 10-year well above its 2-year counterpart, which traded at 2.571%. The 2-year had recently been trading above the 10-year triggering a so-called yield curve inversion.

The yield on the 5-year U.S. government bond moved to 2.779%, and the 30-year Treasury yield rose to 2.669%. Yields move inversely to prices, and 1 basis point is equal to 0.01%.

Brainard, who normally favors easy policy and low rates, said the central bank needs to move quickly to drive down inflation.

“Inflation is much too high and is subject to upside risks,” she said in prepared remarks Tuesday. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”

Investors are also awaiting the minutes from the previous Fed meeting, due out on Wednesday afternoon, for any clues to the central bank’s plan for tightening monetary policy.

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— CNBC’s Vicky McKeever contributed to this market report.

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