On Tuesday, the Treasury note yield saw an increase, building on gains from the previous session. Traders were reevaluating the possibility of the Federal Reserve cutting rates in June. The benchmark rate rose almost 7 basis points to 4.397%, reaching its highest level since November 28. Yields and prices move in opposite directions, with one basis point equaling 0.01%.
Following data released by the Institute for Supply Management on Monday showing that manufacturing in the U.S. expanded for the first time in 17 months, the market reacted. The ISM manufacturing index rose to 50.3, surpassing the 47.8 figure from February and the 48.1 Dow Jones consensus estimate. Any number above 50 indicates growth, which was seen as a positive sign.
The unexpected uptick in U.S. manufacturing growth has led investors to be more cautious about the possibility of significant Fed rate cuts moving forward. Based on fed futures trading, the likelihood of a rate cut in June has decreased to around 58.8%, compared to about 70% a week prior
