Friday, March 24, 2023

investors assess monetary policy outlook

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U.S. Treasury yields were little changed Monday as investors mulled the Federal Reserve’s next interest rate decision and considered the outlook for the broader economy.

As of 4:13 a.m. ET, the yield on the benchmark 10-year Treasury was almost flat and was last trading at around 3.4804%. The 2-year Treasury yield was down by just over one basis point to 4.1701%.

Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.

Investors weighed future monetary policy decisions as uncertainty over whether the Fed would hike interest rates by 25 or 50 basis points at its next meeting on Jan. 31 and Feb. 1 continued.

In recent weeks Fed speakers have hinted that they would consider slowing rate increases to 25 basis points. Some, including Fed Governor Christopher Waller, have said outright that they would favor a smaller increase.

It comes as both wholesale and consumer inflation figures for December declined on a monthly basis.

Many investors are hoping for the central bank to slow, or completely pause, rate hikes this year. The pace of rate increases announced by the Fed in its battle against high inflation has sparked concerns about a possible recession.

No key economic data is expected on Monday. As the week continues, investors will be following S&P Global’s purchasing managers’ index report on Tuesday, as well as GDP figures on Thursday and the personal consumption expenditure price index on Friday.

The latter is one of the Fed’s favored inflation gauges and could therefore inform the central bank’s next policy moves.

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