Treasury prices fell on Thursday, pushing yields higher, after Federal Reserve Chairman Jerome Powell said he remained confident of inflation returning back to the central bank’s 2% target.
What are Treasurys doing?
The 2-year Treasury note yield TMUBMUSD02Y, +0.70% sensitive to shifting expectations for Fed policy, rose 2.3 basis points to 2.323%, after it marked its biggest daily jump in more than two weeks on Wednesday.
The benchmark 10-year note yield TMUBMUSD10Y, +0.65% was up 1.2 basis points to 2.523%. The 30-year bond yield TMUBMUSD30Y, +0.18% was virtually unchanged at 2.914%. Bond prices move inversely to yields.
What’s driving the market?
Market participants betting on a rate-cut were taken aback after Powell said the recent decline in inflation was unlikely to last, dampening speculation of policy easing later this year. The central bank had kept interest rates unchanged at a range between 2.25% and 2.50%, and trimmed the interest rate it pays on bank reserves held at the Fed to 2.35% from 2.40%.
See: Fed holds interest rates steady as economy grows at ‘solid rate’ and inflation stays low
Read: Powell’s press conference draws rave reviews for simplicity of the Fed’s message
After the Fed meeting, investors will now turn their attention to the jobs report on Friday. Economists are uncertain over the potential strength of the number, after Automatic Data Processing said private-sector employment grew by 275,000 jobs in April. The official jobs data, however, is loosely correlated with the ADP report.
In other economic data, jobless claims for the week ending in April 27 and first-quarter productivity will come out at 8:30 a.m. Eastern time. March factory orders data will be released at 10 a.m.
What’s else is on investors’ radar?
European factories continued to stay in the doldrums. Markit’s eurozone manufacturing purchasing managers index stood at 47.9 in April, from 47.8 in March. Any reading below 50 reflects a slowdown in industrial activity.
The Bank of England left its key interest rate unchanged at 0.75%, as expected. Analysts say a lack of certainty from the U.K.’s plans to leave the European Union kept the British central bank on hold.
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