Treasury yields little changed following Fed commentary, economic data
U.S. government debt yields held steady Monday as investors digested commentary from Chicago Federal Reserve President Charles Evans.
At 3:29 p.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, held steady at 2.551%, while the yield on the 30-year Treasury bond was little changed at 2.963%.
Fed President Evans told CNBC on Monday that he’d be happy to leave overnight lending rates unchanged until fall 2020 in order to help buoy inflation to a sustainable level.
“I had been thinking that inflation was finally going to be solid, hit 2% on a sustained basis — maybe go over a little bit. That was my projection,” Evans said on “Squawk Box ” on Monday. “And on the strength of that I had — as recently as September and December — thought that maybe a couple rate hikes were in our future.”
The core personal consumption expenditures index, the Fed’s preferred inflation gauge, rose to 2% in May 2018, but has failed to hit the target consistently. Some Fed officials — including Evans — have indicated they’d be comfortable letting prices rise above a 2% pace temporarily to balance out times of lower inflation.
Meanwhile, New York manufacturers said they’ve seen a slight pickup in April despite waning forecasts for the next several months.
Though the Empire State Manufacturing Survey’s general business conditions index rose six points to 10.1, the index for future business conditions fell to its lowest level in more than three years to 12.4. That is a decline of 17 points from the prior month.
Over the weekend, U.S. Treasury Secretary Steven Mnuchin said he was hopeful trade talks with China would soon come to a close. He said Saturday that a U.S.-China trade deal would go “way beyond” previous agreements between the two nations, and that the two sides were “close to the final round” of negotiations, Reuters reported.
Market players are also carefully watching any Fed-related developments amid predictions of a potential cut in rates. Speaking to CNBC Friday, Mohamed El-Erian, Allianz’s chief economic advisor, said the Fed has gone from “too hawkish” last year to “too dovish” at the moment.