What’s going on here?
US Treasury yields plummeted on Wednesday, hitting two-week lows as the market gears up for a potential rate cut from the Federal Reserve.
What does this mean?
The Bureau of Labor Statistics revised payrolls from April 2023 to March 2024, slashing 818,000 jobs – the largest reduction since March 2009. This startling revision, coupled with strong bond demand, pushed yields for two- to 30-year bonds to two-week lows. The Fed’s July meeting minutes revealed that most policymakers might cut rates if data holds up, bolstering market bets for a September rate cut. The rate futures market now fully expects this, with odds of a 50 basis-point cut rising from 25% to 37%. Concurrently, the benchmark 10-year yield fell by 2.6 basis points to 3.791%, while the two-year yield – more sensitive to rate forecasts – dropped by 7.2 basis points to 3.928%. Investors also showed strong interest in the Treasury’s $16 billion…
