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US Yields Rise as Solid Data Keeps Lid on Fed Bets: Markets Wrap – Yahoo Finance

(Bloomberg) — U.S. Treasury yields rose slightly as strong economic data increased expectations that the Federal Reserve is in no hurry to cut interest rates.

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Ahead of the start of the quiet period before the Fed’s meeting, bond markets lost momentum, with two-year Treasury yields nearing the 5% level. The move came a day after the re-emergence of bull-buying targeting U.S. Treasuries at attractive yields, sparking a wave of short-covering. The stock market ended a four-day losing streak that brought the S&P 500 near “oversold” levels.

“Most of this week’s data shows the economy is still firing on all cylinders,” said Chris Larkin of Morgan Stanley’s E*Trade. “That will pose a challenge to the Fed’s rate cut plans.”

Unemployment claims remain subdued, consistent with a healthy job market. Separately, the Philadelphia Fed’s manufacturing activity index beat expectations. Existing home sales fell, but at a pace roughly in line with economists’ median expectations.

Traders are also keeping an eye on Fedspeak. New York Fed President Williams said there was no need to rush to cut interest rates. Asked about the possibility of a rate hike, he said it was not a fundamental expectation, but added that it was possible if the data supported achieving the inflation target.

The 10-year U.S. Treasury yield rose 4 basis points to 4.62%. The S&P 500 index is hovering around 5,040. Micron Technology is poised to win a $6.1 billion grant from the Department of Commerce. Taiwan Semiconductor Manufacturing Co. has reduced its outlook for chip market expansion. Netflix plans to report its results after the close of trading.

Implicit market expectations for a Fed rate cut, which have collapsed over the past two weeks, fell further this week after Chairman Jerome Powell suggested policymakers would wait longer than previously expected to cut rates.

“In line with recent comments from Fed Chair Jerome Powell, we believe the most likely course of action is for the Fed to keep interest rates where they are for now,” said Brian Rose of UBS Global Wealth Management. Ta. “If inflation slows in line with our base-case scenario expectations, the Fed should be ready to cut rates by September.”

International Monetary Fund Managing Director Kristalina Georgieva said there is still a chance the Fed will cut interest rates in 2024.

“The Fed is doing the right thing” by waiting for now, Georgieva said in an interview with Bloomberg TV on Thursday. “The Fed is not ready to cut rates yet, and certainly not ready to cut rates. I don’t think we should be preparing for a rapid decline in rates.”

Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, said the biggest concern in the market right now is that inflation is accelerating again and that there will be not just one or two interest rate cuts in 2024. He says he is pouring cold water on his thoughts.

“We are firmly in the camp of not cutting interest rates in 2024,” he said. “We believe that investors should prepare for a prolonged period of high levels in terms of both inflation and interest rates, and that investment portfolios should be prepared for these developments for the foreseeable future.”

Read: Fed becomes less dovish and aligns with markets

Company highlights:

  • Infosys expects revenue growth to be slow this year, a sign that international customers are limiting technology spending until the global economy accelerates.

  • DR Horton has raised its full-year sales forecast as the U.S. housing market approaches the important spring sales season.

  • Alaska Airlines Group expects second-quarter profits to beat analyst estimates, showing the airline is recovering from a near-single-plane disaster that caused Boeing Co. to ground major aircraft models. Suggests.

  • Las Vegas Sands Corp. said renovations to its Macau entertainment center and hotel will weigh on its results this year.

  • eBay’s use of artificial intelligence has turned the stock’s most bearish analysts into its biggest fans, with Morgan Stanley predicting the stock will rise an additional 25% next year.

  • Anne Wojcicki, CEO of DNA testing company 23andMe Holding, said she was considering taking the struggling company private less than three years after starting a stock sale. Ta.

  • Blackstone collected more fees from large retail funds and credit strategies in the first quarter, offsetting a slower pace of exits.

  • Ally Financial’s net income declined as the company struggled to take full advantage of the recovery in U.S. auto sales.

This week’s main events:

  • Japan CPI, Friday

  • BOE Deputy Governor Dave Lumsden and ECB Board Member Joachim Nagel speak on Friday

  • Chicago Fed President Austan Goolsby speaks on Friday

The main developments in the market are:

stock

  • As of 10:33 a.m. New York time, the S&P 500 was up 0.3%.

  • Nasdaq 100 rose 0.1%

  • The Dow Jones Industrial Average rose 0.6%.

  • Stoxx European 600 rose 0.2%

  • MSCI World Index rose 0.4%

currency

  • Bloomberg Dollar Spot Index little changed

  • The euro fell 0.2% to $1.0655.

  • The British pound was almost unchanged at $1.2448.

  • The Japanese yen remained almost unchanged at 154.54 yen to the dollar.

cryptocurrency

  • Bitcoin rises 4.6% to $63,648.01

  • Ether rose 3.4% to $3,074.41.

bond

  • The 10-year Treasury yield rose 4 basis points to 4.62%.

  • Germany’s 10-year bond yield rose 2 basis points to 2.49%.

  • UK 10-year bond yield remains unchanged at 4.26%

merchandise

  • West Texas Intermediate crude oil fell 0.1% to $82.60 a barrel.

  • Spot gold rose 0.6% to $2,375.21 an ounce.

This article was produced in partnership with Bloomberg Automation.

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