On Wednesday, investors closely examined the latest economic data and analyzed the overall state of the economy. The 10-year Treasury yield rose by more than two basis points to 4.6273%, while the 2-year Treasury yield was more than three basis points higher at 4.9414%. Yields and prices have an inverse relationship, with one basis point equivalent to 0.01%.
Recent economic data has shown resilience in the economy despite high interest rates and ongoing inflation. Expectations for Fed interest rate cuts have shifted, raising questions about whether there will be fewer cuts than previously anticipated this year. Additional economic data is expected later in the week, including durable goods orders, a first-quarter GDP reading, and the personal consumption expenditures price index.
On Tuesday, the S&P Global Flash manufacturing PMI for the U.S. dropped to a four-month low of 49.9 for April, signaling contraction in the sector. This data implied to investors that the economy might be experiencing a slight slowdown, adding uncertainty about its potential impact on Federal Reserve monetary policy decisions.
Fed officials have expressed caution in discussing a timeline for rate cuts in recent weeks, and investors will be attentive to any indications about future monetary policy direction during the upcoming Fed meeting on April 30-May 1, where it is widely anticipated that rates will remain unchanged.
