On Friday, Treasury yields in the United States experienced a decline as investors closely examined the latest economic data and comments from Federal Reserve officials. This caused them to contemplate the potential impact on monetary policy. At 4:20 a.m. ET, the yield on the 10-year Treasury dropped by more than five basis points to 4.5878%, while the 2-year Treasury yield fell by over two basis points to 4.9622%.
Yields and prices have an inverse relationship, with each basis point equivalent to 0.01%. Investors carefully considered the outlook for interest rates as they reviewed the most recent economic data and policymakers’ remarks. There have been indications from Fed officials that interest rates may remain high for a longer period than previously predicted.
During the Semafor’s World Economy Summit, New York Fed President John Williams expressed his lack of urgency to lower interest rates, citing the economy’s strength as his reasoning. He acknowledged that eventual rate cuts might be necessary, depending on how economic developments unfolded. Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari also suggested that rate cuts might be postponed until the end of this year or even until 2025.
In addition to these factors, investors were also influenced by other events such as Philadelphia Fed’s manufacturing survey which exceeded expectations, indicating robustness in the sector, and geopolitical tensions which weighed heavily on their minds due to reports of Israel conducting a limited military attack on Iranian soil early on Friday.
Overall, these events cumulatively affected market sentiment and resulted in a decline in Treasury yields on Friday.
