On Monday, U.S. Treasury yields experienced minimal movement as investors awaited insights from the Federal Reserve’s March meeting, which could offer indications about the future trajectory of interest rates.
As of 6 a.m. ET, the yield on the benchmark 10-year Treasury note saw a marginal increase of less than 1 basis point, standing at 4.308%. Conversely, the yield on the 2-year Treasury note edged slightly lower by less than 1 basis point to 4.715%. It’s essential to note that yields and bond prices exhibit an inverse relationship, with one basis point equivalent to 0.01%.
The Federal Reserve is scheduled to convene on Tuesday and Wednesday, culminating in the announcement of its latest interest rate decision and monetary policy guidance. Market consensus anticipates the central bank to maintain the status quo on interest rates.
Nevertheless, investors are eager for any indications from the Fed regarding its future monetary policy stance, including potential timing and magnitude of rate cuts anticipated for the year. Recent inflation data for February surpassed expectations, suggesting persistent pressure from escalating prices. Fed policymakers have underscored their commitment to data-driven decision-making, emphasizing the need for further evidence indicating a slowdown in inflationary trends.
According to the FedWatch tool by CME Group, traders have priced in approximately a 58% probability of rate cuts occurring in June, a slightly lower figure compared to earlier in the month.
Additionally, market participants await the release of the latest building permit and housing start data, providing insights into the health of the housing market. Concurrently, the Bank of England is slated to announce its decision on interest rates for the United Kingdom, adding to the array of pivotal events shaping global financial markets this week.