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Bonds Rally: Traders Eye Stocks & Data
16 Feb
Summary
- Benchmark 10-year yields are at multi-month lows.
- Traders anticipate at least two Fed rate cuts this year.
- Key economic data to watch include private payrolls.
US bond traders are keenly observing stock market performance and economic indicators this week to determine the longevity of the current Treasury rally. Benchmark 10-year yields have reached their lowest point in months, influenced by a tech-driven stock market downturn and a favorable inflation report released last Friday.
This trend has led traders to anticipate a minimum of two Federal Reserve interest-rate cuts by the end of 2026. The focus now shifts to key releases such as Tuesday's ADP private payrolls data and Wednesday's minutes from the Fed's January meeting. These reports are expected to provide a clearer picture of the economy and policymakers' views on balancing employment with inflation.
As of the current date, the benchmark 10-year yield concluded the past week at 4.05%, while the more policy-sensitive two-year Treasury yield dropped to 3.42%. Traders are pricing in two quarter-point rate cuts and a 50% chance of a third by year-end, highlighting the market's expectations for monetary policy easing.
