US yield curve hits steepest in two years as Fed opts for big rate move
Steeper U.S. yield curve suggests more easing underway
Fed forecasts show additional 50-bps easing this year
Fed Chair Powell says will go fast or slow as appropriate
Fed funds futures bet on 74 bps cuts by end-December
U.S. 10-year yield posts best daily gain since August 21
Adds new comment, graphic, fed funds futures pricing, updates prices
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 18 (Reuters) -The U.S. Treasury yield curve on Wednesday touched its steepest level since July 2022 after the Federal Reserve cut interest rates by 50 basis points, a larger-than-usual rate reduction as the central bank grappled with a weakening labor market.
The widely tracked spread between U.S. two- and 10-year yields hit as wide as 10.2 bps and was last at 8.6 bps US2US10=TWEB. A steeper curve suggests more easing is on the way.
The Fed in a statement said it has gained greater confidence that inflation is moving sustainably toward its 2% goal and that the risks between prices and employment are roughly in balance. It slashed the benchmark overnight rate to a range of 4.75% to 5%.
Before the rate decision, futures on the fed funds rate, which measures the cost of unsecured overnight loans between banks, had been betting on a 50-bp cut, even as a majority of Wall Street economists were anticipating a 25-bp move.
"I think it was fairly anticipated that, whether it was 25 or 50 basis points, what was most important was the messaging behind 50 basis points," said Tom Hainlin, senior investment strategist, at U.S. Bank in Minneapolis.
"And if the messaging was, 'We're very concerned about a potential contraction or slowdown in the economy' ... we didn't hear that messaging. So this wasn't necessarily some preventative medicine for something bad that was going on in the economy, but more they felt that they had the opportunity to bring rates down from a high level."
Late in the session, U.S. Treasury yields rose in choppy trading. The benchmark 10-year yield rose 7.1 bps to 3.713% US10YT=RR after earlier hitting its highest in more than a week. The yield posted its best daily gain since Aug. 21.
U.S. 30-year yields increased 7.6 bps to 4.029% US30T=RR, also registering its largest daily rise in about a month.
On the front end of the curve, U.S. two-year yields advanced 4.2 bps to 3.634% US2YT=RR.
The U.S. central bank's forecast, or the so-called "dots" showed rates going down to 4.375% by the end of 2024, which suggested about an additional 50-bp of easing this year. The year-end forecast for 2025 showed additional cuts of 100 bps, and a final 50 bps in 2026 to end in a 2.75%-3.00% range.
In a press conference, Fed Chair Jerome Powell noted that the central bank is in no rush to cut rates, adding that it will move as fast or as low as it thinks appropriate.
Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, wrote in emailed comments that the decision to go big with the rate cut and Powell's message during the press conference bolstered expectations for the soft landing scenario for the U.S. economy.
"Did the economy need a 50-bp cut today to avoid a breakdown? We don't think so; the labor market is slowing but not crumbling, retail sales data released earlier this week showed a resilient consumer, and the outlook for corporate earnings and profit margins looks solid."
Following the rate decision, fed funds futures have priced in about 74 bps in cuts over the next two policy meetings, and 190 bps of cumulative easing by the end of 2025.
The Fed’s dot plot https://reut.rs/3Xo3JtO
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Nupur Anand; Editing by Alistair Bell and Jonathan Oatis
آخر الأخبار
إخلاء المسؤولية: تتيح كيانات XM Group خدمة تنفيذية فقط والدخول إلى منصة تداولنا عبر الإنترنت، مما يسمح للشخص بمشاهدة و/أو استخدام المحتوى المتاح على موقع الويب أو عن طريقه، وهذا المحتوى لا يراد به التغيير أو التوسع عن ذلك. يخضع هذا الدخول والاستخدام دائماً لما يلي: (1) الشروط والأحكام؛ (2) تحذيرات المخاطر؛ (3) إخلاء المسؤولية الكامل. لذلك يُقدم هذا المحتوى على أنه ليس أكثر من معلومات عامة. تحديداً، يرجى الانتباه إلى أن المحتوى المتاح على منصة تداولنا عبر الإنترنت ليس طلباً أو عرضاً لدخول أي معاملات في الأسواق المالية. التداول في أي سوق مالي به مخاطرة عالية برأس مالك.
جميع المواد المنشورة على منصة تداولنا مخصصة للأغراض التعليمية/المعلوماتية فقط ولا تحتوي - ولا ينبغي اعتبار أنها تحتوي - على نصائح أو توصيات مالية أو ضريبية أو تجارية، أو سجلاً لأسعار تداولنا، أو عرضاً أو طلباً لأي معاملة في أي صكوك مالية أو عروض ترويجية مالية لا داعي لها.
أي محتوى تابع للغير بالإضافة إلى المحتوى الذي أعدته XM، مثل الآراء، والأخبار، والأبحاث، والتحليلات والأسعار وغيرها من المعلومات أو روابط مواقع تابعة للغير وواردة في هذا الموقع تُقدم لك "كما هي"، كتعليق عام على السوق ولا تعتبر نصيحة استثمارية. يجب ألا يُفسر أي محتوى على أنه بحث استثماري، وأن تلاحظ وتقبل أن المحتوى غير مُعدٍ وفقاً للمتطلبات القانونية المصممة لتعزيز استقلالية البحث الاستثماري، وبالتالي، فهو بمثابة تواصل تسويقي بموجب القوانين واللوائح ذات الصلة. فضلاً تأكد من أنك قد قرأت وفهمت الإخطار بالبحوث الاستثمارية غير المستقلة والتحذير من مخاطر المعلومات السابقة، والذي يمكنك الاطلاع عليه هنا.
