By Jamie Chisholm
Bond yields fell early Friday as the market continued to absorb the Fed’s perceived dovish tilt and investors bought sovereign debt as stocks weakened.
What’s happening
— The yield on the 2-year Treasury BX:TMUBMUSD02Y dipped 3 basis points to 3.944%. Yields move in the opposite direction to prices.
— The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 1.8 basis points to 4.21%.
— The yield on the 30-year Treasury BX:TMUBMUSD30Y slipped 1 basis point to 4.543%.
What’s driving markets
Benchmark Treasury yields nudged down, trading just above the lowest levels in more than a week, as early signs of weakness in global stock markets encouraged the buying of sovereign bonds.
Yields also continued to be pressured by recent soft U.S. economic data and comments midweek from the Federal Reserve, which investors inferred meant the central bank did not currently expect tariff increases to boost inflation to the point of preventing anticipated interest-rate cuts.
“The good news is that a period of economic slowdown doesn’t necessarily mean lower asset prices; the central bank policies tend to be supportive of asset valuations in periods of economic slowdown,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Markets are pricing in an 83.1% probability that the Fed will leave interest rates at the range of 4.25% to 4.50% after its next meeting on May 7, according to the CME FedWatch tool.
The chance of at least a 25 basis point rate cut by the subsequent meeting in June is priced at 72.2%.
Chicago Fed President Austan Goolsbee will appear on CNBC at 8:30 a.m. Eastern. New York Fed President John Williams will speak at a Central Bank of the Bahamas event at 9:05 a.m.
-Jamie Chisholm
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03-21-25 0724ET
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