Treasury Yields Almost Fully Erase Post-Inflation Data Surge As Poor Retail Sales Reignite Fed Cut Hopes
Portfolio Pulse from Piero Cingari
U.S. Treasury yields have nearly reversed their increase following January's high inflation report, due to poor retail sales data sparking hopes for Federal Reserve rate cuts. The 10-year Treasury note yield dropped to 4.21%, and the 30-year to 4.4%, both returning to pre-report levels. Retail sales in January fell by 0.8%, leading to increased bets on Fed rate cuts in 2024, with money markets predicting 105 basis points in cuts by year-end. The iShares 20+ Year Treasury Bond ETF (TLT) and the iShares 7-10 Year Treasury Bond ETF (IEF) both saw gains in response.
February 15, 2024 | 3:15 pm
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The iShares 7-10 Year Treasury Bond ETF (IEF) opened 0.5% higher on Thursday, also benefiting from the bond market's optimism regarding potential Fed rate cuts.
IEF's price appreciation is a result of the bond market's rally, driven by the forecasted Fed rate cuts, which tend to increase bond prices by decreasing yields.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 90
POSITIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) opened 0.9% higher on Thursday, benefiting from the bond market's positive response to the increased likelihood of Fed rate cuts.
The increase in TLT's price is directly related to the bond market's positive reaction to the anticipated Fed rate cuts, as lower rates generally lead to higher bond prices.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90