(Remove irrelevant word ‘edge’ from headline) by Herbert Lash NEW YORK, June 28 (Reuters) – Important later this week as Federal Reserve Chairman Jerome Powell and other central bankers speak. Bond yields fell slightly on Wednesday ahead of weaker US inflation data, with Europe largely unanimous about keeping monetary policy tight. Powell put the U.S. rate hikes on hold, and European Central Bank President Christine Lagarde said at the ECB’s annual meeting in Sintra, Portugal, that July would see euro zone interest rates rise for the ninth straight time. . Powell said monetary policy may not be restrictive enough to keep inflation under control, despite significant disinflation going on. “It’s quite likely that we’re going into a recession, but it’s not the most likely case,” he said. Two-year bond yields, which typically reflect interest rate expectations, fell 4.6 basis points to 4.718%, while benchmark 10-year bond yields fell 5.6 basis points to 3.712%. “Powell sounds hawkish, but yields don’t move as if they believe him,” said Thierry Wisman, global currency and rates strategist at Macquarie in New York. “If the Fed is being hawkish, people will look around and say, ‘Wait a minute, there’s a lot of evidence that disinflation is happening in the US,’” he said. We don’t take hawkish stances seriously,” he added. The 2-Year and 10-Year Yield Spread Widened Further to -100.8 Basis Points and an Inverse Curve with Front-End Rates Much Higher than Long-Term Bonds Over the Long Term is Considered a Very Predictive Precursor to a Recession. ing. Ian Ringen, head of U.S. rates strategy at BMO, said European growth would likely put downward pressure on global rates and lead to U.S. Treasury auctions, “especially if the dollar outperforms and U.S. rates are relatively high. ba,” he said. Capital markets in New York “There are arguments that Treasuries as an asset class will look more and more attractive,” he said, adding that futures are likely to see the Fed’s overnight borrowing rate rise above 5% through March 2024. He said he expects the rate to continue and expects a significant rate cut. Expectations that the Fed will raise rates at its next meeting of policymakers on July 25-26 rose to 78.7%. Markets are waiting for the May Personal Consumption Expenditure (PCE) index to be released on Friday. Analysts polled by Reuters expected the core rate to rise 4.7% from a year earlier, still well above the Fed’s 2% target. Wisman said the market was seeing evidence of disinflation in both the PCE and the consumer price index. Production costs are coming down. “Most company surveys suggest that costs are coming down,” he said. “It’s another reason they don’t believe Powell said he’ll hike two more times.” The 30-year US Treasury yield fell 3.7 basis points to 3.803%. The Treasury Department sold $35 billion worth of seven-year bonds at a high yield of 3.839%. The break-even point for five-year Treasuries Inflation-Protected Securities (TIPS) was previously 2.161%. The 10-year TIPS break-even rate was 2.187% last time, indicating that the market expects inflation to average about 2.2% annually over the next decade. Wed Jun 28 2:48pm New York / 1848 GMT Price Current Yield % Net Change (bps) 3-Month 5.18 5.3362 -0.005 6-Month 5.23 5.4467 -0.015 2-Year 99-211/256 4.7181 – 0.046 3-Year 99-110/256 4.3317 -0.062 5-Year 100-32/256 3.9722 -0.063 7-Year 99-108/256 3.8455 -0.066 10-Year 97-60/256 3.7117 -0.056 20 year bond 98-80/256 3.9986 -0.039 30Y 96-208/256 3.8043 -0.036 USD Swap Spread Last (bps) Net Change (bps) US 2Y Dollar Swap 22.50 -1.00 Spread US 3Y Dollar Swap 15.75 -0.50 Spread TU .S. 5-Year Dollar Swap 7.00 0.00 Spread US 10-Year Dollar Swap 2.50 0.00 Spread US 30-Year Dollar Swap -37.50 -0.50 Spread (Reported by Herbert Rush, Edited by Alexander Smith and Nick Zieminski)
