US Treasury bonds saw an increase in their prices. This phenomenon was observed as investors carefully scrutinized potential moves in American monetary policy, interpreting the outcomes of the latest Federal Reserve meeting.
Based on the CME Group’s FedWatch Tool, a significant increase in the probability of a rate cut in June emerged, rising from 55.2% recorded the previous week to 62.6% currently.
The Federal Reserve kept interest rates at 5.25%-5.50%, as expected, and confirmed the anticipation of a 75 basis point cut in rates in 2024. Inflation data for January and February, which revealed higher-than-expected figures, had triggered concerns that the central bank might change its rate cut forecasts. However, this did not happen and, in addition, Fed Chair Jerome Powell said that these two reports “did not change the overall situation” regarding inflation, which is showing signs of slowing.
Analyzing Treasury bonds, we note a drop in the 10-year yield, which went from 4.271% to 4.218%, indicating an increase in price. The three-month bond yield also saw a decrease, settling at 5.373%. Other yields observed include the 2-year bond, whose yield declined to 4.604%.