• Thu. Apr 25th, 2024

Federal Reserve Rate Cuts: Will They Happen Soon?

BySamantha Nguyen

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

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

The unexpected growth in U.S. manufacturing was seen as reducing the likelihood of significant Fed rate cuts, according to Dutch bank ING, which noted that 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. This was due to data released by the Institute for Supply Management (ISM) on Monday that showed manufacturing in the U.S. expanded for the first time in 17 months, with an ISM manufacturing index increasing to 50.3 from February and surpassing the Dow Jones consensus estimate of 48.1%.

Investors remained cautious about rate cuts in general, and this sentiment was reflected in market pricing that currently indicates anticipation of three cuts, with a preference for a June initiation pending further data updates, according to Gregory Faranello, head of U.S rates strategy at AmeriVet Securities.

Despite keeping interest rates unchanged for five consecutive times since January, including March and April when inflation concerns had been at their highest point this year so far, America’s central bank has reiterated its expectation for three quarter-point cuts by the end of this year.

The Fed is taking a cautious approach and data is aligning with their stance,” Faranello said.”He added that while markets are pricing in these moves now, they could always change course if new information comes up.”

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

Leave a Reply