U.S. Treasury yields were little changed on Monday as investors digested the latest inflation data, which could affect Federal Reserve monetary policy, and considered the outlook for the economy.
The 10-year Treasury yield dipped a basis points to 3.959%. The 2-year Treasury was down by a basis points at 4.887%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Treasurys
Investors considered what could be next for inflation and Fed monetary policy.
That comes after Friday's reading of the personal consumption expenditures price index — the Fed's favored inflation gauge — suggested that inflation is cooling. The core PCE, which excludes food and energy, was up by 4.1% on an annual basis, just below the anticipated 4.2%, marking the lowest level since September 2021. Â
Many investors took that as a sign that the Fed may be able to pause, or end, its interest rate-hiking campaign in the near future as increases appear to be working to cool the economy and ease inflation.
Last week, the central bank hiked rates by a 25 basis points, and Fed Chair Jerome Powell suggested that further policy decisions would be data-dependent and rate cuts are unlikely to come this year.
Despite some promising signs, some on Wall Street — including Wells Fargo Investment Institute's Paul Christopher — say it may be too early to "call mission accomplished" on the inflation front.
"We expect interest rates to stay higher for longer," the head of global investment strategy said in a Monday note. "Rate markets currently are pricing in no further rate hikes and anticipate rate cuts by March 2024. We are skeptical that the Fed can step aside quite so soon."
This week, investors will get more data on the labor front, including the latest JOLTs job openings figures on Tuesday. That's followed by ADP's employment data and July's jobs report. The numbers could further inform the Fed's policy moves and indicate whether the tight labor market is beginning to unwind.