US government bonds rise… Buy at low prices as PCE meets expectations < Bonds/Forex < Text of article

(New York = Yonhap Infomax) Correspondent Jinho Jeong = U.S. Treasury bond prices are rising. It is interpreted that investment sentiment has improved as the US personal consumption expenditure (PCE) price index for March came out in a direction that was in line with market expectations.

Intraday trend of U.S. 10-year Treasury bond interest rates

[출처 : 연합인포맥스]

According to Yonhap Infomax’s overseas interest rate intraday screen (screen number 6532), as of 9 a.m. on the 26th (US Eastern time), the 10-year Treasury bond interest rate in the New York bond market was 4.674%, down 3.60bp from 3 p.m. on the previous trading day. .

The 2-year interest rate, which is sensitive to monetary policy, fell 1.10bp to 4.993% during the same period.

The 30-year government bond interest rate was traded at 4.785%, down 3.50bp from the previous day.

The reversal between 10-year and 2-year bonds expanded from -29.4bp on the previous trading day to -31.9bp.

Government bond interest rates and prices move in opposite directions.

The March core PCE price index announced on this day was in line with market expectations compared to the previous month and slightly exceeded expectations compared to the same period last year. The core PCE price index is the Federal Reserve’s (Fed) preferred price indicator.

The U.S. Department of Commerce announced that the core PCE price index in March rose 0.3% compared to the previous month. This figure is in line with the market forecast of a 0.3% increase compiled by the Wall Street Journal (WSJ).

The core PCE price index in March rose 2.8% compared to the same period last year, exceeding the market forecast of a 2.7% increase by 0.1 percentage points.

The core PCE price index rose 0.5% compared to the previous month in January, again stimulating inflation concerns, but showed signs of slowing down to some extent as the monthly increase was limited to 0.3% from February to March.

The March PCE price index, which includes both energy and food prices, also rose 0.3% from the previous month, meeting market expectations.

Bond investors are reacting to these results with a buying advantage. As the March PCE price index was largely in line with market expectations and government bond prices have recently fallen steeply, it seems to be viewed as an opportunity to buy at low prices.

However, there was little change in market expectations regarding the timing of the base interest rate cut. This means that the inflation level is not high enough for the Federal Reserve to bring forward the interest rate cut.

According to the Chicago Mercantile Exchange (CME) fed watch tool, after the PCE price index was announced in March, the possibility of a base rate cut in June was reflected at only 11.5%. There is little change from the previous day’s closing price of 9.7%.

“There is nothing the Fed can do now,” said Neil Dutta, head of economic analysis at Renaissance Macro Research. “The Fed has no choice but to watch for strong inflation and employment growth.”

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This article was published at 22:56 on the Infomax financial information terminal.