Yields on U.S. government debt closed at their lowest levels in more than a week on Friday, reflecting the market’s reaction to a week of central bank decisions and economic data analysis by analysts.
Key Takeaways:
- The yield on the 2-year Treasury decreased by 3.2 basis points to 4.598% on Friday, down from 4.630% on Thursday.
- Over the week, the yield on the 2-year Treasury declined by 12.3 basis points.
- The yield on the 10-year Treasury fell by 5.3 basis points to 4.217% on Friday, compared to 4.270% on Thursday.
- Throughout the week, the yield on the 10-year Treasury decreased by 8.6 basis points.
- The yield on the 30-year Treasury dropped by 4.9 basis points to 4.392% on Friday, down from 4.441% on Thursday.
- Over the week, the yield on the 30-year Treasury experienced a decrease of 3.5 basis points.
- These levels observed on Friday represent the lowest for the 2-, 10-, and 30-year rates since March 12-13, as per 3 p.m. Eastern time figures from Dow Jones Market Data.
What drove markets
Throughout the week, global financial markets were abuzz with activity as central banks around the world made significant moves. One of the notable events was the Bank of Japan’s decision to terminate its negative interest rate policy, signaling a shift in monetary strategy. Similarly, the Swiss National Bank embarked on what many interpreted as the beginning of a broader trend of rate cuts on a global scale. Meanwhile, the U.S. Federal Reserve maintained its stance, affirming its plan for gradual interest rate reductions over the course of the year.
Amidst these developments, the 10-year Treasury yield remained in focus, hovering around its 200-day moving average of 4.2%. This level served as a barometer for investor sentiment, reflecting market reactions to the central banks’ actions. With no significant U.S. economic data released on Friday, the market’s trajectory continued to be influenced by the dovish stance adopted by the Fed earlier in the week.
During the Fed’s meeting on Wednesday, policymakers reiterated their expectation for three quarter-point rate cuts throughout the year, despite revising their core inflation projections upwards. This reaffirmed the central bank’s commitment to supporting economic growth amid lingering concerns about inflationary pressures and global uncertainties.
Looking ahead, market participants are eagerly awaiting the release of the February data for the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, scheduled for next Friday. This report will provide further insights into the trajectory of inflation and could shape future monetary policy decisions by the Federal Reserve.