Rising Treasury Yields: What Investors Need to Know About the US Economy and Federal Reserve Monetary Policy

As investors analyzed the latest economic data and assessed the state of the economy, U.S. Treasury yields increased on Wednesday. At 4:54 a.m. ET, the 10-year Treasury yield rose by over two basis points to 4.6273%, while the 2-year Treasury yield was up by more than three basis points to 4.9414%. Yields and prices move in opposite directions, with each basis point representing 0.01%.

Despite concerns about elevated interest rates and persistent inflation, recent economic data has indicated resilience in the economy. Expectations for impending interest rate cuts by the Fed have shifted, raising questions about whether there will be fewer cuts than expected this year. More economic data is set to be released throughout the week, including durable goods orders, a first-quarter GDP reading, and the personal consumption expenditures price index.

Investors continued to monitor economic data as uncertainty about the state of the economy and its potential impact on Federal Reserve monetary policy decisions persisted. Recent data, including the S&P Global Flash manufacturing PMI for the U.S. in April, which came in at a four-month low of 49.9, suggested a contraction in the sector. This led investors to believe that the economy may be experiencing some easing.

The Fed’s upcoming meeting on April 30-May 1 will closely watch all data releases ahead of it while maintaining current rates with caution regarding a timeline for rate cuts due to uncertainty surrounding economic outlook