"I think the market was really pricing in some strong accommodation from the Fed in the second half of the year," said Blair Shwedo, head of investment grade trading at U.S. Bank.
Powell's remarks will come after a slew of economic data released this week. Private payrolls rose 296,000 in April, higher than expected, according to data published Wednesday by ADP Research Institute. Data from ISM showed the services sector expanded in April for the fourth straight month. On Tuesday, data showed new job openings in March dropped to their lowest level since May 2021, a day after news of slightly stronger-than-expected purchasing in the manufacturing sector. "When we're looking at data that we've seen so far for April, that's been a bit more mixed," said Andrzej Skiba, head of BlueBay U.S. Fixed Income at RBC Global Asset Management. "So from the Fed's perspective, it very much would underline the need for a pause after this."
The yield curve between two-year Treasury notes and 10-year
bonds , a reliable indicator of expectations for
the economy, was last inverted negative 55.7 bps.
On Thursday, the Treasury Department is slated to auction
$50 billion in four-week bills and $45 billion in
eight-week bills .
The yield on existing four-week bills remained unchanged,
while the yield on eight-week bills ticked up 4.6 bps to 5.128%.
Treasury said on Wednesday it plans to keep coupon issuance
across all maturities through July as the outlook for the U.S.
debt limit remains uncertain, announcing total quarterly
refunding of $96 billion.
Sales of $40 billion in U.S. three-year notes, $35 billion
in 10-year notes, and $21 billion in 30-year bonds are slated
for next week, unchanged from the last refunding announcement.
On Friday, the government is scheduled to release its latest
nonfarm payroll employment figures, which will further help the
Fed determine its course for rates.
May 3 Wednesday 10:42AM New York / 1442 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 5.0825 5.2202 -0.007
Six-month bills 4.825 5.0143 -0.006
Two-year note 99-227/256 3.9346 -0.045
Three-year note 100-82/256 3.6339 -0.059
Five-year note 100-118/256 3.3987 -0.067
Seven-year note 100-184/256 3.3836 -0.065
10-year note 101 3.3787 -0.060
30-year bond 99-32/256 3.6733 -0.059
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 27.00 -1.25
spread
U.S. 3-year dollar swap 17.00 0.00
spread
U.S. 5-year dollar swap 10.25 0.50
spread
U.S. 10-year dollar swap 3.25 1.00
spread
U.S. 30-year dollar swap -40.00 1.00
spread
(Reporting by Matt Tracy; Editing by Nick Macfie and Richard Chang)
