High Treasury Yields Suggest Contraction in U.S Manufacturing Sector: Investors Assess Economic Data and Federal Reserve Monetary Policy Possibilities

On Wednesday, investors analyzed the most recent economic data and considered the impact on the state of the economy. At 4:54 a.m. ET, the 10-year Treasury yield had risen by over two basis points to 4.6273%, while the 2-year Treasury yield had increased by more than three basis points to 4.9414%. Yields and prices move in opposite directions, with one basis point equaling 0.01%.

Investors were assessing economic data amidst uncertainty about the state of the economy and its potential impact on Federal Reserve monetary policy decisions. The S&P Global Flash manufacturing PMI for the U.S was reported at a four-month low of 49.9 for April, indicating contraction in the sector as readings below 50 suggest. This data suggested a slight easing in the economy to investors.

The recent economic data showed resilience in the face of high-interest rates and persistent inflation, sparking questions about the timing of potential interest rate cuts by the Federal Reserve this year. Expectations for rate cuts have been pushed back in recent weeks, leading to speculation about the possibility of fewer cuts than previously anticipated. As investors closely monitor any hints about future monetary policy from Fed officials who have shown caution regarding timeline for rate cuts recently.

More economic data is expected in the coming week, including durable goods orders on Wednesday, a first-quarter domestic product reading on Thursday, and personal consumption expenditures price index on Friday. The Federal Reserve’s next meeting is scheduled for April 30-May 1, where rates are expected to remain unchanged but investors will be closely watching any hints about future monetary policy decisions that may impact their investments positively or negatively