Bond yields slide, key yield curve inversion narrows as traders take into account Fed’s subsequent transfer

Key Treasury yield curve inversion narrowed on Friday, after touching steepest level since 2000 Yesterday.

Yield curve inversions, or when shorter-dated government bonds have higher yields than longer-term bonds, are often seen by the market as a sign that a recession is coming.

But the gap between 2-year and 10-year yields narrowed on Friday as traders weighed the possibility that the US Federal Reserve would raise interest rates by 75 basis points at its next meeting. not 100 basis points.

At 6:17 a.m. ET, the 2-year yield (which is more sensitive to changes in monetary policy) fell to around 3.126%. Return on benchmark 10-year Treasury bond down 2.5 basis points to 2.934%. Yields move inversely to price and basis point by 0.01%.

Federal Reserve Governor Christopher Waller said on Thursday that he support 75 basis points increase at the central bank’s next meeting, scheduled for July 26-27. However, he said he would be watching the data and be ready for a bigger move if he believed it. it is necessary.

It came after more and more analysts said that 100 base points increase maybe on the table, after Inflation continues to rise more than expected.

Investors are also looking at some of the bank’s disappointing earnings from Thursday. JPMorgan Chase said it had hoarded provisions for bad loans and suspended share buybacks, while Morgan Stanley Report weaker than expected investment banking revenue.

Bigger banking results are expected on Friday from Wells Fargo and Citigroup.

On the economic front, June retail sales, along with import and export prices, will arrive on Friday at 8:30 a.m. ET.

The June industrial production report is due at 9:15 a.m. ET, and preliminary July data on consumer sentiment is released at 10 a.m. ET.

– Sarah Min and Jeff Cox of CNBC contributed to this report.

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