(Bloomberg) – Treasury bonds grew on Friday and were on their way to realizing a small weekly gain after the survey data showed signs of cooling the US economy.
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The yields were lower by at least two base points, and short maturity fell by almost four base points. The lowest levels during the session were reached after an unexpected fall of S&P global measures of activities in services and audits of the mood of the University of Michigan down, both for January. The ascent slightly reduced the fees of the weekly in the week, which began with the inauguration of Donald Trump to another unusual presidential term.
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The data supports the opinion that the federal reserves – which meet from January 28 to 29 – will reduce interest rates at least once this year, as early as June, after reducing at each of the last three meetings. The bonds also benefited from the lack of current action by Trump to introduce customs on imports, although he said he intended it.
“With the Fed, which depends on the data, the market is hyperfocused on every economic edition,” said Christian Hoffmann, a portfolio manager at the Thornburg Investment Management. At the same time, “Politics will continue to be the main driver of instability and uncertainty.”
Money markets and economists surveyed by Bloomberg are unanimous in expecting Fed Jerome Powell and his colleagues to retain a target range of 4.25% -4.5% for the US excessive interest rate next week. Looking on, replacing the feet now favors two decreasing from a quarter of the point by the end of the year. A week ago, only one was expected.
The bonds began to sell out in September, pushing 10-year yields to a 14-month maximum of 4.8% earlier this month, reflecting concern that trade protectionism could lead to inflation. Benign inflation information for December published on January 15th and the Governor’s comment on Governor Fed Christopher Waller the next day that the ratio of the rate by the middle of the year still stopped bleeding.
Short-term yields of government bonds, more sensitive than long-term changes by FED rates, have moved the most this week. The 10-year yield is higher for 36 base points than two years, compared to 34 base points a week ago. Data on open interest rates for Treasury Fans suggest that investors expect further curvature of the curve.
