Monday, 19 August 2024 13:55

Weak Inflation Fuels Treasury Market

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Treasuries gained momentum following a weaker-than-expected U.S. producer prices report, reinforcing the potential for the Federal Reserve to lower interest rates more aggressively. The two-year yield, which closely mirrors Fed policy expectations, fell by 8 basis points, while the 10-year yield decreased by 6 basis points. 

 

Market participants are now eagerly anticipating the upcoming consumer price index (CPI) data, which could further influence rate-cut expectations. However, some Federal Reserve officials remain cautious, emphasizing the need for more economic data before supporting any rate reductions.

 

Despite recent market volatility, with shifts from expectations of a soft landing to a hard landing, uncertainty persists. 


Finsum: Markets thought there was going to be an emergency Fed meeting last week, but look to Jackson Hole for better clarification.

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