Short-term Treasuries rose and traders boosted their expectations for Federal Reserve interest-rate cuts later this year after the US economy contracted for the first time since 2022.
The gain in two-year notes on Wednesday pushed yields lower by about four basis points after data showed a decrease in US gross domestic product, more moderate consumer spending and tameness in the Fed’s preferred gauge of inflation. In the swaps market, traders increased their wagers on four quarter-point reductions by the end of the year, with the first fully priced in for July.
The moves added to the advances in the $29 trillion Treasury market in April, even after the volatility that rocked investors earlier in the month on President Donald Trump’s evolving trade policy. A key Bloomberg gauge of US government bonds was up 0.6% in April, the fourth monthly advance and the longest winning streak since September.
“The overall takeaway to…
