US Treasury Bonds Rise as Confidence in the Fed Increases – Europe Market Wrap

Treasuries surged, with the 10-year benchmark yield at its lowest level since March, as traders bet on the Fed starting an easing cycle in September.

Contracts for the S&P 500 were stable as traders awaited US retail sales data today to see if inflation and growth have slowed enough to satisfy policymakers who are debating when it is safe to begin lowering interest rates.

Strategists believe that a disappointing report of US retail sales could help drive the Treasuries surge. They predict the Fed will decrease interest rates three times this year, beginning in September, and propose planning for the yield curve to steepen. So-called steepener trades favour purchasing short-term notes and selling long bonds.

Fed’s Powell said on Monday that second-quarter economic figures indicate that inflation is on track to meet the central bank’s 2% target.