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Treasury yields rose Tuesday morning as U.S. April retail sales data showed the economy still has strength and as investors await remarks by Federal Reserve Chairman Jerome Powell later in the day.
What yields are doing
-
The 10-year Treasury note yield
BX:TMUBMUSD10Y
rose to 2.953%, up from 2.877% at 3 p.m. Eastern on Monday -
The 2-year Treasury note
BX:TMUBMUSD02Y
yielded 2.657% versus 2.568% on Monday afternoon. -
The yield on the 30-year Treasury bond
BX:TMUBMUSD30Y
was 3.148%, rising from 3.084% late Monday.
What’s driving the market
Data released on Tuesday showed U.S. retail sales climbed in April by a solid 0.9% and signaled the economy still has plenty of vigor. Economists polled by The Wall Street Journal had expected a 1% advance. In addition, U.S. industrial output was up by 1.1% last month versus expectations of a 0.5% gain.
Meanwhile, investors who are looking for clues to the Federal Reserve’s plans for hiking interest rates further as it attempts to get to grips with persistently high inflation will be tuned in to a flurry of speeches by Federal Reserve officials Tuesday, particularly comments by Powell.
The Fed chief will speak at 2 p.m. at The Wall Street Journal’s Future of Everything conference. Last week, Powell acknowledged that the Fed probably should have raised rates “a little sooner.” In a radio interview, he also said that the Fed’s ability to achieve a so-called soft landing, a term for tightening monetary policy without sending the economy into a deep downturn, wasn’t fully within the control of policy makers.
On Tuesday, investors are also set to hear from Philadelphia Fed President Patrick Harker, Minneapolis Fed President Neel Kashkari, Cleveland Fed President Loretta Mester and Chicago Fed President Charles Evans.
What analysts say
- “I think the question of ‘soft landing or hard’ will be uppermost in peoples’ minds,” said Marshall Gittler, head of investment research at BDSwiss Holding, in a note. “Also I’d expect [Powell] to reaffirm that he’ll be shooting for 50 bps (basis points) hikes at each of the next two meetings and is not considering a 75 bps hike. Any hints that a 75 bps hike might be possible would be big news.”
- See interviews with Fed Chairman Jerome Powell, the CEOs of companies including Wells Fargo, Moderna and FanDuel. Register for virtual access to The Wall Street Journal’s Future of Everything Festival, May 17-19. (Select virtual pass for complimentary access.)
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