US Treasury yields are falling! US CPI data and Powell's speech are in the spotlight

Wind ·  02/12 21:35

Source: Wind

US Treasury yields fell on Monday, and investors focused on key economic data and recent remarks from Federal Reserve officials, which could provide clues about interest rate prospects.

The 10-year US Treasury yield fell 3 basis points to 4.16%. The 2-year US Treasury yield fell more than two basis points to 4.46%.

Investors are concerned about the important economic data to be released this week and the statements of US Federal Reserve officials, as uncertainty about when to start cutting interest rates and how many times they will cut interest rates this year remains.

The consumer price index (CPI) for January will be released on Tuesday, and the producer price index (PPI), retail sales data and other data will be released later this week. Investors hope that these data will indicate that the Federal Reserve may start cutting interest rates as soon as possible.

Meanwhile, Federal Reserve officials have said in recent weeks that economic data will play an important role in their decision to cut interest rates, and hinted that they are unlikely to cut interest rates in March, which many investors had hoped until now.

This includes Federal Reserve Chairman Jerome Powell (Jerome Powell), who said earlier this month that the Federal Reserve is still looking for more data evidence that inflation is falling back to the Fed's target range of 2%.

On Friday, the US Labor Department's Bureau of Labor Statistics (Bureau of Labor Statistics) lowered the consumer price index (cpi) for December, saying that the index had risen 0.2% in the same month. The initial CPI reading was 0.3%.

According to the Bureau of Labor Statistics (Bureau of Labor Statistics) of the US Department of Labor Statistics (CPI), the latest consumer price index (CPI) shows that a basket of goods and services rose 0.2% from the previous month, lower than the 0.3% initially announced.

Although this change is only mild, it helps confirm that inflation is slowing as 2023 ends, giving the Federal Reserve more room for maneuver to begin cutting interest rates later this year.

For the Bureau of Labor Statistics, these revisions are a matter of course, but they received extra attention this year after the market reacted strongly to last year's changes. Signs that inflation rose more than expected in 2022 have boosted US Treasury yields and raised concerns among investors that the Federal Reserve may maintain a stricter monetary policy.

In particular, Federal Reserve Governor Christopher Waller (Christopher Waller) called for attention to the 2022 revisions, which drew the market's attention to the latest round of interest rate hikes.

After excluding food and energy, the core CPI increased 0.3% month-on-month, which is the same as the data initially released. Federal Reserve policymakers tend to pay more attention to core indicators because they better reflect long-term trends in inflation.

Ian Shepherdson (Ian Shepherdson), chief economist at Pantheon Macroeconomics, said that overall, the revised data showed that the overall CPI annualized growth rate for the fourth quarter was 2.7%, down 0.1 percentage points from the data initially released.

Paul Ashworth (Paul Ashworth), chief North American economist at Capital Economics (Capital Economics), said that the impact of these revisions is limited, although they may have some impact on the Federal Reserve's policy.

Ashworth added: “As some Federal Reserve officials clearly feared that last year's situation would be repeated — revisions in the last few months of last year pushed up monthly changes in core prices — there were no meaningful changes this year, at least marginally, supporting interest rate cuts in early May.”


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