AGL 40.10 Increased By ▲ 0.10 (0.25%)
AIRLINK 131.05 Increased By ▲ 1.52 (1.17%)
BOP 6.80 Increased By ▲ 0.12 (1.8%)
CNERGY 4.63 No Change ▼ 0.00 (0%)
DCL 8.97 Increased By ▲ 0.03 (0.34%)
DFML 43.01 Increased By ▲ 1.32 (3.17%)
DGKC 83.56 Decreased By ▼ -0.21 (-0.25%)
FCCL 33.00 Increased By ▲ 0.23 (0.7%)
FFBL 78.25 Increased By ▲ 2.78 (3.68%)
FFL 12.25 Increased By ▲ 0.78 (6.8%)
HUBC 110.85 Increased By ▲ 0.30 (0.27%)
HUMNL 14.51 Decreased By ▼ -0.05 (-0.34%)
KEL 5.60 Increased By ▲ 0.21 (3.9%)
KOSM 8.30 Decreased By ▼ -0.10 (-1.19%)
MLCF 39.65 Decreased By ▼ -0.14 (-0.35%)
NBP 62.30 Increased By ▲ 2.01 (3.33%)
OGDC 199.98 Increased By ▲ 0.32 (0.16%)
PAEL 26.59 Decreased By ▼ -0.06 (-0.23%)
PIBTL 7.80 Increased By ▲ 0.14 (1.83%)
PPL 160.30 Increased By ▲ 2.38 (1.51%)
PRL 26.68 Decreased By ▼ -0.05 (-0.19%)
PTC 18.82 Increased By ▲ 0.36 (1.95%)
SEARL 83.10 Increased By ▲ 0.66 (0.8%)
TELE 8.24 Decreased By ▼ -0.07 (-0.84%)
TOMCL 34.40 Decreased By ▼ -0.11 (-0.32%)
TPLP 9.06 No Change ▼ 0.00 (0%)
TREET 16.98 Decreased By ▼ -0.49 (-2.8%)
TRG 60.45 Decreased By ▼ -0.87 (-1.42%)
UNITY 28.00 Increased By ▲ 0.57 (2.08%)
WTL 1.42 Increased By ▲ 0.04 (2.9%)
BR100 10,590 Increased By 183.2 (1.76%)
BR30 31,987 Increased By 273.8 (0.86%)
KSE100 98,784 Increased By 1455.8 (1.5%)
KSE30 30,756 Increased By 563.4 (1.87%)
Markets

Yields erase earlier rise to be little changed before Fed meeting statement

  • Business reopenings from COVID-19-related shutdowns have accelerated this month, and investors are also pricing for higher inflation as fiscal spending increases.
  • "With the reopening process, it seems to have hit a higher gear in April," said Tom Simons, a money market economist at Jefferies in New York.
Published April 28, 2021

NEW YORK: US Treasury yields gave back earlier gains on Wednesday before the Federal Reserve is due to conclude its two-day meeting, with investors focused on whether the US central bank will give any hints towards removing its unprecedented accommodation as the American economy improves.

Business reopenings from COVID-19-related shutdowns have accelerated this month, and investors are also pricing for higher inflation as fiscal spending increases.

"With the reopening process, it seems to have hit a higher gear in April," said Tom Simons, a money market economist at Jefferies in New York.

Investors will be watching to see whether the Fed indicates that it may taper its bond purchases as the economy bounces back, though the Fed is viewed as unlikely to give any firm signals that tightening is near.

"There has to be an acknowledgement that its somewhere out there on the timeline, but I think that's about as far as we're going to go," Simons said. "It's more likely at the next meeting we get something more concrete on that front.

"It's going to be more or less a tightrope walk trying to acknowledge what's gone on in the economy over the inter-meeting period, which has pretty much all been positive, while also not really saying that the Fed is any closer to pulling back on accommodation," he added.

Benchmark 10-year Treasury yields have pulled back from one-year highs of 1.776% reached last month, and have been trading at the bottom end of their recent range before rising this week.

The 10-year yields were last little changed on the day at 1.627%, after earlier rising to 1.652%.

Inflation expectations, meanwhile, hit eight-year highs, with breakeven rates on 10-year Treasury Inflation-Protected Securities pricing in average annual inflation of 2.43% for the next decade.

Gross domestic product data on Thursday is expected to show strong growth in the first quarter, while next week's employment data for April should also show an improving labor market.

US President Joe Biden will address Congress on Wednesday with his plans to spend $1.5 trillion on childcare and college education and raise taxes on wealthy Americans to pay for it. That is on top of a $2 trillion jobs-and-infrastructure plan paid for by raising taxes on US companies.

Market participants will also watch to see whether the US central bank raises the interest it pays on excess reserves (IOER) and overnight reverse repurchase agreements as borrowing rates in repo intermittently trade negative and short-term bill yields approach zero.

Comments

Comments are closed.