US 10Y TREASURY: space for further relaxation?
During the previous period the market was trying to price its expectations of a less than three rate cuts during the course of this year, giving up on the Fed's announcement from the latest FOMC meeting. The meeting held on May 1st, showed that the market was right in its assumptions, considering that the emerging US inflation might put halt on rate cuts this year.
This was also confirmed by the Fed Chair Powell in an after the meeting speech, considering that the Fed will stay devoted to the 2.0% inflation target. Treasury yields reacted during his speech, however, the major impact on 10Y Treasury yields had an April jobs report. The weaker than expected nonfarm payrolls, as well as, increased unemployment to 3.9% in April from 3.8% posted for the previous month, were main triggers for 10Y Treasury yields to reach the lowest weekly level at 4.45%. Still, they are ending the week at 4.51%.
The market will slowly digest the new information during the week ahead. Still, some further relaxation in the 10Y Treasury yields might be expected. However, they first need to test the 4.5% level before they start their move toward the 4.4%.
This was also confirmed by the Fed Chair Powell in an after the meeting speech, considering that the Fed will stay devoted to the 2.0% inflation target. Treasury yields reacted during his speech, however, the major impact on 10Y Treasury yields had an April jobs report. The weaker than expected nonfarm payrolls, as well as, increased unemployment to 3.9% in April from 3.8% posted for the previous month, were main triggers for 10Y Treasury yields to reach the lowest weekly level at 4.45%. Still, they are ending the week at 4.51%.
The market will slowly digest the new information during the week ahead. Still, some further relaxation in the 10Y Treasury yields might be expected. However, they first need to test the 4.5% level before they start their move toward the 4.4%.
