Latest news with #Two-year
Reuters
24-07-2025
- Business
- Reuters
Traders increasingly confident of ECB pause until year-end
LONDON, July 24 (Reuters) - Traders grew more convinced on Thursday that the European Central Bank will hold rates after the summer as the bank's relatively upbeat assessment of the economic outlook and signs an EU-U.S. trade deal is near reduced bets on further cuts. Money markets now price in less than a 25% chance of a 25 basis-point rate cut when the ECB meets next on September 11. That's down from close to 50% on Wednesday, before news broke that the European Union and the United States were heading towards a deal that would result in a broad tariff of 15% applying to EU goods. The ECB, which kept rates on hold on Thursday after eight cuts over the last year that halved its policy rate to 2%, fuelled those moves further. Traders also reduced bets on another rate cut by the end of the year following ECB President Christine Lagarde's comments and now see a roughly 70% chance of a move by December, having nearly fully priced it in last week. Before the ECB's press conference they had seen an October move as a coin toss. At the central bank's post-meeting news conference, Lagarde stressed the ECB was in a "good place" to hold policy and watch how risks develop in the coming months. "Perhaps it was the lack of the use of the word 'pause' and she (Lagarde) described rates as on hold and decision by decision," said UBS Wealth Management economist Dean Turner. Two-year German bond yields , sensitive to interest rate expectations, rose as much as 11 bps to 1.91%, and were eyeing their biggest one-day jump since May. Germany's 10-year yield , the benchmark for the euro area, was up similarly. The euro reversed most of an earlier fall against the dollar and was last flat at around $1.1776 European shares slightly pared gains and were last up 0.2%. (.STOXX), opens new tab Lagarde playing down ECB forecasts showing inflation below target next year had also made her sound "a bit hawkish", said Arne Petimezas, director of research at AFS Group. A 15% tariff would be only half the 30% rate U.S. President Donald Trump had threatened to impose on the EU earlier in July. If it materialises it also takes out the ECB's worst case scenario of a 20% tariff. Indeed, two sources told Reuters policymakers are setting a high bar for a September cut and would need to see a significant deterioration in growth and inflation before backing further easing. But with no certainty on the final tariff outcome, the policy outlook remains uncertain. Some investors remained sceptical that a 15% tariff rate improved the euro zone outlook materially. "Unlike Japan, the relationship between Europe and the U.S. is more complicated as it also includes a security angle," said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, who expects more rate cuts to shield the bloc's economy. How much the euro rises from here was also key, as its appreciation hurts exporters and - according to Lagarde - makes it harder for firms to invest. The euro surged nearly 17% from February to early July, hitting its highest since 2021 around $1.18, prompting the ECB's vice president to signal $1.20 as a pain point. It is not too far off those levels now. If trade uncertainty fades, the ECB may not need to cut rates again and the focus is likely to shift to the timing of a rate hike, analysts said. Traders price in a roughly 30% chance of a rate hike in the second half of 2026, LSEG data shows, with German fiscal stimulus expected to start supporting the bloc's economy. "Markets are not far away from switching focus from the last cut to the first hike," said Deutsche Bank's chief European economist Mark Wall.
Time of India
02-05-2025
- Business
- Time of India
Scott Bessent wants Fed to yield on rates
Treasury Secretary Scott Bessent said that the US Treasury market is telegraphing that the Federal Reserve ought to lower interest rates . "We are seeing that two-year rates are now below Fed funds rates. So that's a market signal that they think the Fed should be cutting," Bessent said in an interview with Fox Business. Two-year Treasury yields were at 3.57% in early traders, compared with a benchmark federal funds rate of 4.33%. The Fed targets the key rate at a range of 4.25% to 4.5%. Bonds Corner Powered By Scott Bessent wants Fed to yield on rates Two-year Treasury yields were at 3.57% in early traders, compared with a benchmark federal funds rate of 4.33%. The Fed targets the key rate at a range of 4.25% to 4.5%. RBI's bond purchases set to surpass Covid era levels Foreign funds sour on US corporate bonds as Trump sows chaos US yields rise after better than expected manufacturing report Overseas investors pull Rs 13,359 crore from Indian bonds amid US yield surge and geopolitical tensions Browse all Bonds News with Fed policymakers have suggested that they're not yet ready to resume lowering rates, with inflation still running above their 2% target and given the likely pressure on prices to come from President Donald Trump's tariff hikes. The Fed next decides on rates May 7 when almost all economists predict them to stand pat. Trump has repeatedly criticised Fed Chair Jerome Powell for not cutting rates this year, saying Tuesday that "I have a Fed person who's not really doing a good job." 10-Year Yields Live Events Despite Trump's continued attention to the Fed's benchmark, Bessent argued that he and the president are focused on 10-year Treasury yields - "targeting that point on the curve." The Treasury chief highlighted that 10-year yields have retreated since Trump took office. They were around 4.15% Thursday, compared with around 4.63% on January 20. National Economic Council Director Kevin Hassett said the drop in 10-year rates is "saving the federal government lots of money" in terms of interest costs.
