[ad_1]
U.S. bond yields fell on Wednesday despite data showing a better-than-expected jump in retail sales for October, shrinking the spread between 2- and 10-year rates to negative 63 basis points in a deeply worrisome sign about the economic outlook.
What’s happening
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.361%
slipped to 4.344% from 4.359% as of Tuesday. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.743%
dropped to 3.719% from 3.798% late Tuesday. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.924%
fell to 3.913% from 3.980% on Tuesday afternoon.
What’s driving markets
In data released on Wednesday, U.S. retail sales jumped 1.3% for October, signaling that consumers are still spending plenty of money, despite persistent inflation and the Federal Reserve’s efforts to combat it. That’s better than the 1.2% rise that had been forecast by economists polled by The Wall Street Journal. In addition, industrial output was down 0.1% in October after a revised 0.1% gain in the prior month.
Markets are pricing in an 81% probability that the Fed will raise interest rates by another 50 basis points to a range of 4.25% to 4.50% on Dec. 14, according to the CME FedWatch tool. The central bank is mostly expected to take its fed-funds rate target to at least 4.75% to 5% by June.
The batch of Fed officials slated to take to the podium on Wednesday include New York Fed President John Williams, who will be speaking at a Treasury market conference; Fed Vice Chair Michael Barr, who is set to testify on regulation at the House Financial Services Committee; and Fed Governor Christopher Waller, who is expected to talk about the economic outlook.
Meanwhile, U.K. 10-year gilt yields
TMBMKGB-10Y,
fell 10.8 basis points to 3.186% even though data showed surging food and energy prices pushed inflation up last month by more than expected to 11.1%, the highest since October 1981. Investors are waiting for the U.K. finance minister’s Autumn Budget statement on Thursday.
[ad_2]
Source link
