U.S. Treasury yields fell on Friday as investors weighed the path ahead for monetary policy and considered when the Federal Reserve will begin cutting rates.
U.S. Treasury yields fell on Friday as investors weighed the path ahead for monetary policy and considered when the Federal Reserve will begin interest rate cuts.Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.
Investors considered the outlook for monetary policy following the Federal Reserve's latest meeting earlier this week, which saw the central bank leave rates unchanged.However the Fed also pointed to likely rate cuts ahead, with policymakers indicating that they are expecting three rate cuts to take place this year, which was in line with previous central bank estimates.
Investors were concerned that the Fed may cut this number as recent economic data indicated that inflation may be more persistent than previously expected. The Fed did not, however, provide any more clarity about a potential timeline for rate cuts. Traders were last pricing in an over 90% chance that the central bank will leave rates unchanged at its next meeting on April 30-May 1, but a roughly 72% likelihood of a June rate cut according toThe Fed again noted that economic data would be a key marker for when rates will be cut and said that its estimates were based on the economy developing"broadly as expected.
The next economic data releases that could provide some hints about economic development are slated for next week, when the personal consumption expenditures price index will be released, among other key reports.Vanguard doesn’t believe the Fed will cut interest rates this year
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