U.S. Treasury yields fell on Tuesday as investors assessed the outlook for the economy ahead of fresh data due this week which could provide hints about the Federal Reserve’s next policy moves.
At 5:28 a.m. ET, the yield on the 10-year Treasury was down by 7 basis points at 3.443%. The 2-year Treasury was last down by more than 8 basis points at 4.06%.
Yields and prices have an inverted relationship and one basis point equals 0.01%.
Investors considered what could be next for the U.S. economy and Federal Reserve policy, especially regarding interest rates, ahead of the central bank’s next rate-setting meeting on May 2-3. A 25 basis point rate hike is widely anticipated.
Until then, investors will be closely following the latest economic data releases, including the personal consumption expenditure price index due on Friday. It is one of the Fed’s preferred inflation measures.
In recent weeks, central bank officials have indicated that rates could go higher still and remain elevated for longer in order to bring inflation down. That’s despite the latest consumer and producer price index reports suggesting that inflationary pressures are easing.
On Tuesday, March’s new home sales figures and April’s consumer confidence figures are due.
Investors also digested earnings from banks that were affected by last month’s fallout in the sector, including First Republic Bank which on Monday said that deposits declined by 40% in the first quarter but had since stabilized. UBS reported Tuesday, noting that it had seen inflows since announcing its takeover of Credit Suisse.
