TLT - Rates Spark: Euro Rates Almost Back To Normality
2024-07-04 03:20:00 ET
Summary
- Softer data from the US is paving the path to a September Fed cut, but more is needed to see 10Y UST yields breaking out of the current trading range.
- Friday’s payroll numbers could confirm a weakening labour market.
- Except for French bond spreads, eurozone rates markets are returning to normality from before the start of the French election turmoil.
By Benjamin Schroeder | Michiel Tukker | Padhraic Garvey, CFA
Softer US data, an omen for weaker payrolls on Friday
Softer data stacks up in the US, shifting the focus somewhat away from politics and back on the Federal Reserve and its ability to cut rates later this year. The rise in initial and continuing claims delivered more evidence of a cooling jobs market, but it was the dismal ISM services that pushed market rates lower yesterday, taking the 10Y Treasury yield back down to 4.35% after having come close to 4.5% at the start of this week. However, this still means we are well within the recent trading ranges. Not just in outright terms, but also when it comes to the curve. 2s10s has actually reflattened over the past sessions, which given the data may seem somewhat counterintuitive, but may speak more to the reasons behind the latest steepening leg, which was driven by longer rates....
Rates Spark: Euro Rates Almost Back To Normality