Growing confidence in the Fed's future interest rate cuts led to the fact that US bonds rose in price for the third month in a row. The last time they had such a good period was three years ago, Bloomberg reports.
The yield on the 10-year U.S. Treasury note fell more than 2 basis points to 4.177 percent on Monday. The two-year yield edged up less than one basis point to 4.394 percent. Let us remind you that at the end of April, the ten-year bond yield was 4.68 percent, and the two-year bond yield was 5 percent.
US bond yields are falling as the market expects the Fed to start cutting interest rates after the holiday period.
"If you look at market prices, they already factor in the September cut." What's next? Can we cut twice? Of course. I think the bigger market question is whether we can have six or even more," Wells Fargo strategist Erik Nelson said.
The swaps market has priced in at least two 25-basis-point cuts this year in the U.S. before the end of this year. The first one will be held in September.
"We're in the September cut camp and I think there's a good chance there will be three cuts in 2024 and one in the first part of 2025," said Kate Moore of BlackRock. In her opinion, this is confirmed by the expected higher disinflationary pressure at the end of this year.
David Mericle of Goldman Sachs expects a change in the language of the statement on Wednesday, which will show the Fed's greater willingness to ease monetary policy due to favorable macroeconomic data.
