Treasury yields were holding steady on Friday, with longer-term notes backing away from recent highs ahead of a consumer confidence report and home sales data.
What happened
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
rose less than a basis point to 4.364%, after ending at a one-week high of 4.355% on Thursday. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
slipped 1 basis point to 4.13% from Thursday’s level of 4.142%, which was the highest since Dec. 12. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
fell 2 basis points to 4.348%, after hitting its highest since Dec. 4 on Thursday, at 4.371%.
What’s driving markets?
Weekly jobless claims that fell to a 16-month low, followed data earlier in the week showing stronger than expected retail sales data, and together have supported the case that investors may be hoping for far too much in the way of interest rate cuts this year.
More data is ahead for Friday, with an initial reading on consumer sentiment by the University of Michigan at 10 a.m. and existing home sales for December coming at the same time.
A slew of Federal Reserve officials have also joined in the pushback for speedy rate cuts, with Atlanta Fed President Raphael Bostic reiterating on Thursday that rate cuts likely won’t come until later in the year.
Markets are pricing in a 97.4% probability that the Fed will leave interest rates unchanged at between 5.25%-5.5% on Jan. 31, according to the CME FedWatch Tool. The chance of a 25-basis-point rate cut by March was seen at 53.8%, down from 76.9% a week ago. However, fed-funds futures traders held on to the expectation of five to seven quarter-point cuts by December.
Chicago Fed President Austan Goolsbee is expected to make a TV appearance at 8:30 a.m. Eastern, with Fed Vice Chair for Supervision Michael Barr scheduled to speak at 1 p.m. and San Francisco Fed President Mary Daly at 4:15 p.m.
