• Wed. Apr 17th, 2024

Federal Reserve Rate Outlook Fluctuates as U.S. Economy Shows Signs of Growth

BySamantha Jones

Apr 2, 2024
Investors scrutinize U.S. Treasury yields amid economic data evaluation

On Tuesday, the 10-year Treasury note yield increased, adding to gains from the previous session as traders reconsidered the possibility of the Federal Reserve cutting rates in June. The benchmark rate climbed almost 7 basis points to 4.397%, reaching its highest level in two weeks and close to the peak levels of the year. Meanwhile, the 2-year Treasury note yield rose nearly 1 basis point to 4.726%.

Investors remained cautious about the possibility of rate cuts in the future after unexpected growth in U.S. manufacturing was seen as reducing the likelihood of significant Fed rate cuts, according to Dutch bank ING. The odds of a rate cut in June based on fed futures trading fell to around 58.8%, down from about 70% a week earlier.

The U.S. central bank kept interest rates unchanged for the fifth consecutive time in February, maintaining the benchmark overnight borrowing rate within the range of 5.25%-5.5%, as anticipated by markets and investors alike. The Fed reiterated its expectation for three quarter-point cuts by the end of the year, with a preference for an initiation in June pending further data updates, according to Gregory Faranello, head of U.S. rates strategy at AmeriVet Securities.

The Institute for Supply Management (ISM) released data on Monday that showed U.S manufacturing expanded for the first time in 17 months, with an increase in their manufacturing index from 47.8% in February to 50.3%. A reading above 50 indicates growth, with this index measuring expansion versus contraction.

Market pricing currently indicates anticipation of three cuts by year’s end, with a preference for an initiation in June pending further data updates.

In conclusion, while markets continue to be cautious about potential rate cuts due to recent economic developments such as unexpected growth in U

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

Leave a Reply