The 10-year US Treasury bonds rose slightly on Tuesday as investors awaited new economic data after the U.S. Federal Reserve further fueled already high expectations for imminent interest rate cuts.
The yield on 10-year US Treasury bonds rose less than one basis point to 3.829%, while the yield on 2-year government bonds was around 4 basis points lower at 3.899%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Federal Reserve Chairman Jerome Powell said on Friday it was “time for a policy adjustment,” increasing expectations for a rate cut at the central bank's next meeting. Powell, however, declined to provide specifics on the timing or magnitude of the cut.
“The direction is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the allocation of risks,” Powell said in his keynote speech at the Fed's annual meeting in Jackson Hole.
Market participants are firmly counting on a rate cut at the Fed meeting on September 18. According to the CME Group's FedWatch tool, traders currently estimate a probability of around 66 percent that interest rates will be cut by 25 basis points next month, while 34 percent expect a cut of 50 basis points.
On Tuesday morning, the S&P CoreLogic Case-Shiller national housing price index showed that prices in the largest U.S. cities rose more than expected in June. The index rose 0.4 percent on a monthly basis but also posted an annual gain of 6.5 percent, beating the Dow Jones estimate of 6.3 percent.
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