Yields move sideways ahead of long weekend
Yields move sideways ahead of long weekend
Source: Live Mint
(Corrects day of week to Wednesday in paragraph 9, from Thursday)
U.S. Treasury yields mixed amid market calm
Fed officials see no immediate rate change amid uncertainty
Trump criticizes Powell, calls for interest rate cuts
Japan and China increase Treasury holdings in February
NEW YORK, April 17 (Reuters) – The yield on the benchmark U.S. Treasury note inched up on Thursday, while its shorter-term counterpart slipped to an eight-day low, concluding a calmer four-day run after President Donald Trump’s tariff flip flops nearly blew up the market last week.
The bond market closes early at 2 p.m./1800 GMT ahead of Good Friday, when many exchanges around the world are closed.
The yield on the benchmark U.S. 10-year Treasury note was up 1.3 basis points (bp) from late Wednesday at 4.292%. The two-year yield, which typically moves in step with interest rate expectations, fell 1.5 bp to 3.771%.
Federal Reserve Bank of New York President John Williams said Thursday he sees no imminent need for a change in central bank interest rate policy as Trump administration tariffs are likely to drive up inflation, weaken growth and push up unemployment.
His comments echoed those of Fed Chair Jerome Powell, who told the Economic Club of Chicago a day earlier that the U.S. central bank would wait for more data on the economy’s direction before changing interest rates, noting that there was a potentially tough situation developing for the Fed in which inflation is pushed higher by tariffs while growth and potentially employment weaken.
Trump posted on his Truth Social social media platform early Thursday, to little market reaction, that Powell’s termination “cannot come fast enough,” while calling for the U.S. central bank to cut interest rates, the sort of pressure that Powell on Wednesday pledged to resist as the Fed grapples with an outlook complicated by Trump’s own policies.
“He has called for Powell’s departure a few times now,” noted Ross Bramwell, market strategist at Homrich Berg in Atlanta. “But I don’t believe that President Trump would make that move at this time. He would get some pushback from other Republicans in the Senate and the House…even public opinion would probably go against as most people have confidence in the market because of an independent Fed.”
Thursday’s release of data showing fewer-than-expected housing starts last month, down 11.4% from February’s starts, with a surprisingly large 1.6% increase in building permits, was not much of an event. Same with data showing 215,000 Americans filed for unemployment claims last week, down from the previous week’s upwardly revised 224,000 claims.
Late Wednesday the monthly Treasury International Capital System report showed Japan and China, the two largest foreign holders of Treasury securities, increased their hoards in February. The report was notable for showing a 3.4% rise in foreign holdings in the run-up to the market turmoil in recent weeks that brought much talk of loss of faith in the dollar and U.S. assets like Treasuries.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 51.9 basis points.
The yield on the 30-year bond rose 2.4 bp to 4.771%.
Results from Treasury’s auction of five-year Treasury Inflation Protected Securities will be published an hour before the close. The sale comes as inflation expectations as shown in surveys by the New York Fed and University of Michigan have soared, even as the market-based reflection of sentiment, namely inflation breakevens implied by TIPS, have remained tame.
The breakeven rate on five-year TIPS was last at 2.359% after closing at 2.337% on Wednesday.
The 10-year TIPS breakeven rate was last at 2.191%, indicating the market sees inflation averaging about 2.2% a year for the next decade.
The term structure in Fed funds futures shows traders are betting on at least a 25 basis point cut by the Federal Open Market Committee at almost every meeting in 2025, for a total easing of 100 bps from the 4.25% to 4.50% range in place since December. (Reporting by Alden Bentley; Editing by Andrea Ricci)
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