U.S. Treasury yields have started the week higher, adding to last week’s gains as traders continue to adjust bets in expectation of fewer Fed rate cuts this year. The implied (fed funds futures) year-end Overnight rate is currently 4.694%, suggesting just shy of three full 25 basis-point cuts from the current 5.329%. In January the implied O/N year-end rate was 3.65%, which equated to more than seven 25 basis-point cuts. Recent U.S. economic data has shown a pattern of resurgent inflation, leading Fed officials to reset the FOMC’s rate cut outlook.
Treasury yields are higher primarily in the mid-tenors, the 3-6yr +0.018%.
The U.S. dollar is lower vs. most G10 currencies, the biggest declines against those traditionally tied to commodity exposure: -0.99% vs. SEK, -0.60% vs. NOK, -0.46% vs. AUD and -0.42% vs. NZD. The dollar is also -0.15% vs. EUR, -0.09% vs. GBP and -0.06% vs. CAD.
The spot price of gold marked another all-time high, trading to $2,353.79 today and eclipsing Friday’s record close at $2,329.50.
Today and tomorrow are relatively quiet in terms of economic data releases for the U.S. But that changes with Wednesday’s CPI (consumer inflation) data for March, followed shortly by Thursday’s PPI (producer prices) data.
