Treasuries Mixed; Short End Closing a Volatile Week With Gains
The 30-year yield rose 1 basis points to 4.88% while the two-year yield slipped 1 basis point to 3.72%, steepening the yield curve ahead of readings on US retail sales, manufacturing and business sentiment later in the day.
The two-year rate headed for 4 basis points drop on the week after interest-rate cut speculation drove it to a three-month low on Thursday.
Treasuries have been whipsawed by US inflation data in recent days. A benign reading of CPI early in the week and White House pressure for Federal Reserve rate cuts spurred a rally, only for a bigger-than-expected jump in producer prices on Thursday to prompt a reassessment.
Traders are now pricing an almost 90% possibility that the Fed will reduce borrowing costs by 25 basis points in September. They trimmed bets after fully discounting such a cut earlier in the week, when Treasury Secretary Scott Bessent suggested that the central bank should cut rates by 50 basis points next month.
'A move of 25 basis points in September followed by similarly sized cuts in the following couple of quarters appears like a reasonable baseline assessment of the likely path for US rates,' Mark Dowding, chief investment officer of the BlueBay Fixed Income unit at RBC Global Asset Management, wrote in a note.
'That said, we think risks are tilted towards more aggressive policy action,' particularly if the next reports on payrolls and inflation indicate slowing growth and benign price risks, he added.
Markets are pricing a small possibility that the Fed will deliver more than 50 basis points of cuts by December. Myles Bradshaw, head of global aggregate strategies at JPMorgan Asset Management, said that such a move would hinge on the next monthly jobs report.
'There is a chance we get 50 and it's going to be that roulette wheel of the next payrolls report,' Bradshaw said on Bloomberg TV. 'If that is showing zero payrolls growth, then 50 basis points is on the table.'
--With assistance from Alice Atkins.
More stories like this are available on bloomberg.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
21 minutes ago
- Mint
Air India cancels Milan-Delhi flight due to maintenance issue
Mumbai, Aug 17 (PTI) Tata Group-owned private carrier Air India on Sunday said it cancelled its Milan-Delhi flight of August 16 after detecting a maintenance issue at the last minute. Alternative arrangements are being made to fly the passengers to their destination at the earliest, Air India said in a statement. "Flight AI138 operating from Milan to Delhi on August 16 was cancelled due to a maintenance task identified during pushback," the statement said. "Our ground team in Milan extended immediate assistance to all the affected passengers, providing hotel accommodation and offering full refunds on cancellation or complimentary rescheduling as opted by the passengers," it said. According to Air India, along with the maintenance issue, the operating crew of the flight come under the mandatory flight duty-time limitation norms. Air India generally operates its Boeing 787-8/9 aircraft fleet to cater to European destinations. The airline, which came under private hands in January 2022, has, of late, been delaying, cancelling some flights at the last minute due to technical and maintenance issues. This is despite airline CEO and Managing Director Campbell Wilson repeatedly claiming that Air India has carried out comprehensive checks on its Boeing 787 aircraft fleet. A Delhi-bound Air India flight from Bhubaneswar was cancelled just prior to its departure on August 3 due to high cabin temperature. On July 31, an Air India Boeing 787-9 aircraft flying to London had to abort take-off at Delhi airport and return to the bay due to a technical issue. In a message to the customers recently, while listing out the various steps taken after the fatal crash of an AI-171 flight to London soon after take-off from the Ahmedabad airport, Wilson said detailed inspections of its Boeing 787-8 and 787-9 aircraft were done and "no issues were found during inspection".
News18
an hour ago
- News18
Belgium meets EU target for winter with gas reserves
Brussels [Belgium], August 17 (ANI/WAM): The Belgian gas supply is currently 92.1% full. Brussels, along with Portugal, has already met the European target for the upcoming winter, according to figures from the Aggregated Gas Storage Inventory (AGSI).Database on the Gas Infrastructure Europe website showed that the Belgian gas network operator Fluxys has filled the underground gas storage in Loenhout with 7.745 terawatt-hours (TWh) of natural gas. The storage is thus 92.1% full. Only Portugal performs better, with a fully filled gas reserve. For the entire EU, the gas reserves are, according to the figures from Tuesday morning at 6 AM, 72.3% full; this amounts to 820.48 EU countries do have a larger storage capacity than Belgium, so it takes longer to fill them. Germany has the largest storage capacity, with nearly 250 TWh. There, the reserves are currently 65% full. Italy (83.6%), the Netherlands (60.8%), France (80.8%), and Austria (77.4%) also have significant storage 2022, EU member states must fill their gas reserves to at least 90% by November 1 each year. This obligation was meant to ensure that they had sufficient buffers after the Russian invasion of Ukraine triggered supply issues. Gas storage facilities cover about 30% of consumption in winter. (ANI/WAM)
&w=3840&q=100)
Business Standard
an hour ago
- Business Standard
AI boom seen driving next decade of emerging markets performance
Emerging-market funds are pivoting to capture the artificial intelligence craze, with some investors predicting that booming technology spending will drive returns for years to come. Encouraged by the success of Chinese AI developer DeepSeek and Asia's powerhouse semiconductor firms, asset managers like AllSpring Global Investments and GIB Asset Management are concentrating more of their portfolio in AI stocks. That's been a winning trade, with AI companies being the six biggest contributors to the rally in Bloomberg's EM stocks index this year. 'This trend could last for the next 10 to 20 years,' said Alison Shimada, head of total emerging markets equity at AllSpring, which oversees $611 billion. 'The impact on local populations within EM will be transformational.' While much of the AI investment frenzy has focused on a handful of Silicon Valley firms, EM companies that can harness the technology or supply crucial components are benefitting. AI servers, for example, have become the main growth driver for Taiwan's Hon Hai Precision Industry Co., which is known as Foxconn. The top contributors to Bloomberg's EM stock index this year are Taiwan Semiconductor Manufacturing Co., Tencent Holdings Ltd., Alibaba Group Holding Ltd., Samsung Electronics Co., SK Hynix Inc. and Xiaomi Corporation, together accounting for 37% of the index's rally. Emerging-market stocks that are highly exposed to AI have even outperformed the so-called Magnificent Seven megacap tech firms so far this year, according to equities strategists at Citigroup Inc. 'You cannot invest in emerging markets without having a sanguine and optimistic view of what this AI story can evolve into from a corporate earnings perspective,' said Kunal Desai, London-based co-portfolio manager for global emerging markets equities at GIB Asset Management. Desai said that Taiwan and South Korea will be 'central drivers' of the EM market story over the next two to three years, with Malaysia, China, India, parts of Latin America and the Middle East seeing 'disproportionate gains' due to their exposure to AI data and applications. His fund has invested in AI stocks during recent market dips, predicting that a third of emerging market returns will come from AI-related stocks in the coming years. There are signs that the momentum will continue as AI adoption accelerates across segments including cloud computing and electrical vehicles. The average estimate of forward 12-month earnings for EM tech stocks has increased 15% since the start of the year, compared to 6% for EM stocks overall. 'The share of AI contribution from the performance standpoint will only grow from here,' said Xingchen Yu, an emerging markets strategist at UBS Global Wealth Management. 'The rise of AI and tech is creating a new layer of secular growth, especially in North Asia.' The AI revolution could help EM stocks overcome a key obstacle: earnings performance. Company results have lagged forecasts every quarter since early 2022, with MSCI EM Index companies collectively missing profit expectations by more than 12%, according to data compiled by Bloomberg. But firms in the AI-heavy information-technology sector have consistently met earnings projections since the fourth quarter of last year, boosting investor confidence. 'This sector has been expected to grow explosively and will continue to do so in the future,' said Young Jae Lee, senior investment manager at Pictet Asset Management Ltd. 'AI will continue to be a key sector within emerging markets.'
