Treasury bond prices are falling this morning, while Treasury yields have spiked following today's Consumer Price Index report.
The report showed that both headline and core prices rose 0.4% month-on-month in March, adding doubt to the idea that the spike in inflation in January and February was just a blip.
“The benchmark rose this morning by about 14 basis points to 4.49% from 4.35% previously,” RBC said. “As of yesterday's close, Treasuries are down 0.83% so far this month, while today's price action may add to those losses.”
Fed funds futures market data currently reflects about a 20% chance that the first cut will arrive in June, with two cuts fully priced in by 2024.
Later today, markets will receive the minutes of the Federal Reserve's March meeting, which may provide more details on policymakers' thinking on reducing rate cut projections in 2025,” RBC said.
“Federal Reserve spokespeople have recently rejected the idea of multiple rate cuts this year, so any hawkish tone emerging from the minutes may help add more context to today's CPI report at the end of the trading day.” , the analysts added. “We will also look for information on when the Fed will slow down its quantitative tightening campaign, as Fed Chair Powell signaled the process could begin fairly soon in his post-meeting press conference last month.”
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