BOND REPORT: Treasury Yields Hold Ground Ahead Of Fed Minutes
22 May 2019 - 12:32PM
Dow Jones News
By Sunny Oh
Treasury yields struggled for direction on Wednesday as
investors looked to glean clues on the Federal Reserve's policy
stance from the minutes of its most recent meeting.
What are Treasurys doing?
The 10-year Treasury note yield was mostly unchanged at 2.423%.
The 30-year bond yield was also virtually flat at 2.844%, while the
2-year note yield fell 1.3 basis points to 2.245%.
What's driving Treasurys?
Investors are bracing for the minutes from the April 30-May 1
meeting of the Federal Open Market Committee, the U.S. central
bank's rate-setting group. In particular, market participants hope
to see more clarity on how the recent softness in inflation could
influence the outlook for easier monetary policy, with a large
cross-section of the bond-market still expecting one to two rate
cuts by the end of this year.
See:
(http://www.marketwatch.com/story/whats-next-for-the-fed-wall-street-to-sift-for-clues-in-recap-of-last-fomc-get-together-2019-05-21)What's
next for the Fed? Wall Street to sift for clues in recap of last
FOMC get-togethe
(http://www.marketwatch.com/story/whats-next-for-the-fed-wall-street-to-sift-for-clues-in-recap-of-last-fomc-get-together-2019-05-21)r
(http://www.marketwatch.com/story/whats-next-for-the-fed-wall-street-to-sift-for-clues-in-recap-of-last-fomc-get-together-2019-05-21)
Fed fund futures indicate traders see a 68% chance of the
central bank easing policy, CME Group data show
(https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).
St. Louis Fed President James Bullard said
(http://www.marketwatch.com/story/interest-rate-cut-may-be-needed-if-inflation-target-eludes-feds-bullard-2019-05-22)
on Tuesday the central bank could cut its short-term interest rate
to help achieve the Fed's 2% inflation target.
Other central bankers are on the docket, too. New York Fed
President John Williams will speak at 10 a.m. Eastern time,
followed by Atlanta Fed President Raphael Bostic at 10:10 a.m.
What did market participants say?
"The FOMC Statement on May 1 offered no clues on near term
leanings and did little or nothing to challenge market speculation
on cuts. Chairman Powell's press conference highlighted belief that
recent inflation softness was transitory, rather than permanent, a
view that prompted markets to rein in speculation for near term
cuts," said Stephen Gallagher, chief U.S. economist for Société
Générale.
"Overall, there seemed to be some disconnect between the
statement and the press conference and the FOMC minutes might
clarify views," said Gallagher.
(END) Dow Jones Newswires
May 22, 2019 07:17 ET (11:17 GMT)
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