Treasury Yields Dip as Economic Data Disappoints

Last updated: July 8, 2024

a_man_counts_moneyThe 10-year U.S. Treasury yield slipped again on Wednesday following disappointing economic indicators.

Marking a drop of over 8 basis points, the 10-year Treasury yield settled at 4.352%. Meanwhile, the 2-year Treasury yield edged down by nearly 4 basis points to 4.698%.

In the bond market, where yields and prices move in opposite directions, lower yields mean higher prices for Treasurys. Each basis point represents a 0.01% change.

Wednesday’s economic reports indicated a cooling labor market, influencing the downward trend in yields.

ADP’s data revealed weaker-than-expected private payroll growth for June, while unemployment benefit claims exceeded economists’ projections.

These figures foreshadow Friday’s eagerly anticipated nonfarm payroll report for June.

Later in the morning, bond yields further declined following the release of ISM services data, which fell notably below economists’ expectations.

These developments heightened concerns about a slowdown in the U.S. economy.

In the afternoon, market watchers eagerly await minutes from the Federal Open Market Committee’s June meeting.

On Tuesday, Treasury yields had already dipped after Federal Reserve Chair Jerome Powell emphasized the central bank’s cautious stance on interest rates, currently set between 5.25% and 5.50%.

Speaking at a monetary forum in Sintra, Portugal, Powell acknowledged the U.S.’s proximity to a disinflationary trajectory.

“We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy,” Powell stated, echoing sentiments echoed by other policymakers in recent months.

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