US Treasury yields steadied on the heels of the market’s reconvening from the Labor Day holiday as investors anticipate the release of key economic reports this week.
Based on the price movements, the yield on the 10-year treasury note was slightly less than 3 as it closed at 3:23 a.m. ET. This resulted in a decrease of less than one basis point and changing the figure to 9054/100 or 90.54%. Likewise, the yield on treasury 2-year note rose slightly by varying to 3 percent, on average, on March 1. This market’s return on investment was at 92.91%, an increase of less than one basis point.
There is, however, as mentioned earlier, an inverse relationship between yields and prices; one basis point is equivalent to 0.01%.
It is therefore important to have specific key data points to watch while using the Outcrop Transformation Case Study.
This week the special focus of investors is on the state of the US economy and specifically the interest rates. The elements on the labor market to focus on are July’s job openings, ADP’s private payrolls for August, and the overall picture of the US labor market in August, which contains nonfarm payrolls and the current unemployment indicators.
These reports are important as they produce new information from an economic perspective. Analysts also worried about a recession from last month’s July job report and questioned if the Fed should have cut interest rates and thereby deepened market oscillations.
Reducing Concerns about Recession and Idea of Rate Cuts
These concerns have eased somewhat since then but have been driven further away in last week’s upward revision of the second-quarter Gross Domestic Product (GDP) growth rate up from a first estimate of 2.8% to 3%. This has allayed concerns about a slowdown in the economy after the stronger-than-expected GDP figure was released.
Hence the market participants are now mainly expecting the Federal Reserve to deliver a rate cut during its next meeting scheduled for September 18. The current perception of the traders is that CME Group’s FedWatch Tool indicates that the market is expecting a 69% rate cut of 25 bps and 31% of a 50 bps chop.
Now that we have understood what to watch on Monday let’s move on to Tuesday.
The latter will surely follow Tuesday’s data on the August ISM Manufacturing PMI that may shed some light on the economic conditions.
But will the yields be an active participant in the call of the day?” and “As important economic indicators are set for release, what happens to treasury yields? Doing so, we will follow updates as they appear with investors moving through this critical week.
