Treasuries Rally Stalls With Yields Near Past Month’s Lows

dz4a0bwz0s{z0bei]c18oi)(_media_dl_1.png BloombergArticle content(Bloomberg) — The Treasury market rally that sent yields to the lowest closing levels in more than two weeks stalled Wednesday as oil prices steadied with Middle East supply curtailed by the US war on Iran.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentUS government bond yields were two to three basis points higher on the day at mid-morning in New York. Tuesday’s closing levels, the lowest since mid-March, were reached amid a nearly 8% slide in the price of the US benchmark oil futures contract. Oil prices stabilized on Wednesday.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe roughly 30% surge in crude prices since the US attacked Iran at the end of February has become the dominant driver of Treasury yields. The related surge in retail gasoline prices is driving steep increases in consumer inflation gauges, wiping out expectations for Federal Reserve interest-rate cuts that previously had been anticipated this year.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentTreasury yields reached their highest levels of the year on March 27, with several tenors higher by about 50 basis points since the war started. Their retreat from those levels initially reflected damage to the US economic outlook. At the same time, oil has retreated from its recent peaks on signs the US administration is seeking to end the crisis.Article content“I think it’s a reflection of a general caution,” Angelo Manolatos, an interest-rate strategist at Wells Fargo, said of the stalled bond rally. “With the spike in energy prices and inflation measures there’s a high bar to return to late February levels.”Article contentFed policymakers had already paused cutting interest rates in January on the view that the their three quarter-point cuts in each of the previous two years had fostered improvement in the labor market. Meanwhile, the consumer inflation gauge they aim to keep at around 2% — the price index for personal consumption expenditures — rose 2.9% last year.Article contentArticle contentDifferent inflation gauges suggest that March data to be reported on April 30 will show an increase from that level. Based on consumer and producer price index data for March released in the past week, economists at Morgan Stanley forecast PCE price acceleration to 3.42% while those at Barclays predicted 3.5%.Article contentCleveland Fed President Beth Hammack, speaking on CNBC Wednesday, said policymakers were likely “to remain on hold for a good while,” amid “two sided risk to rates” that could require either a cut or a hike as the next move.Article contentShort-term interest-rate futures contracts price in a roughly one-in-three chance of a quarter-point cut this year, and fully price one in by September 2027. Before the oil price surge, two quarter-point cuts were fully priced in for this year.Article contentTrending Trump isolation deepens on world stage as allies rebuff, condemn PMN Business The Great Correction: not even Wayne Gretzky's hometown could escape the crash of the 'exurbs' Real Estate Posthaste: What Mark Carney's gas tax cut could mean for the Bank of Canada News Forcing people to pay a moral tax if they leave the country won't inspire them to stay Personal Finance What is Anthropic's Mythos AI model and why does it have the financial world in a panic? Innovation Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Trump isolation deepens on world stage as allies rebuff, condemn PMN Business The Great Correction: not even Wayne Gretzky's hometown could escape the crash of the 'exurbs' Real Estate Posthaste: What Mark Carney's gas tax cut could mean for the Bank of Canada News Forcing people to pay a moral tax if they leave the country won't inspire them to stay Personal Finance What is Anthropic's Mythos AI model and why does it have the financial world in a panic? Innovation