Performance on the benchmark 10 year Treasury note fell by around 2 basis points to 3.4790%, while yields reached 30-year treasury bond slipped by the same amount to 3.5170%. It 2 year return was also lower by 4.2216%. Yields move inversely to prices.
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The Fed’s rate hike on Wednesday slowed by 75 basis points from the previous four hikes. The central bank said interest rates would remain higher throughout 2023, with cuts unlikely until 2024. It also predicted that the “final interest rate” would rise to 5.1% by the end of the hiking cycle.
Seema Shah, chief global strategist at Principal Global Investors, said Tuesday’s promising inflation reading did not appear to sway the Fed on its monetary tightening trajectory. He also suggested that Wednesday’s announcement should mark the “death knell” for the latest rally in risk assets.
“Not only do they see rates above 5% next year, but unless they plan to raise rates to 6%, the dot chart shows no rate cut in 2023.” There seems to be broad acceptance of inflation above 2%. the target at the end of next year. imagine how high percentages they would need if they wanted to earn a Bulgarian point.” Shah said:
“The Fed remains tight-lipped about the possibility of a recession, but most Fed officials believe risks should tilt to the downside. It’s fair to say they’re far more worried about the economic outlook than they’re willing to admit.” :
Investors on the data front will look to the November retail sales figures, due at 9:30 a.m. ET, as well as last week’s jobless claims. Industrial production figures for November are due at 10:15 a.m. ET.
Auctions will be held on Thursday for $45 billion each of 4-week and 8-week Treasury bills.