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The Federal Reserve recently cut interest rates by 0.5 percentage points, but yields on longer-term U.S. Treasurys have actually increased since the rate cut. This demonstrates that the Fed does not have complete control over borrowing costs in the country. Treasury yields, which are set by investor expectations of future short-term rates, play a significant role in determining borrowing costs. While Treasury yields are still lower than earlier in the year, there is no guarantee that they will continue to fall. Some investors believe that yields will rise further, while others anticipate a drop below 3% within the next six months. The direction of the 10-year yield will also depend on the term premium and factors such as Treasury issuance and inflation. [Extracted from the article]

New government data suggests that the job market in the United States from early 2023 through early this year was not as strong as initially reported. The Labor Department estimates that employers may have added 818,000 fewer jobs in the 12 months through March, indicating a monthly job growth of around 178,000 jobs instead of the previously reported 246,000 jobs. This revision is based on more comprehensive but less timely data from state unemployment-tax records. However, it is important to note that these preliminary estimates may be revised upward or downward when the official adjustment is made in February. Some analysts also argue that the revised payroll figures may not account for the recent surge in immigration, which has contributed to the job market. [Extracted from the article]

The stock market rally of 2024 is facing a challenge as key data on jobs and inflation is set to be released. The previous round of data showed strong demand for workers and increasing inflation, interrupting a period of positive economic indicators. Investors are hoping that the data will not confirm a trend, as it could negatively impact stocks and make it harder to rely on interest rate cuts and achieving the Federal Reserve's inflation target. However, some analysts are concerned about high stock valuations and the potential impact of a drop in payroll growth. [Extracted from the article]

Some analysts on Wall Street are skeptical of recent economic data that suggests the U.S. economy is performing well. Reports on inflation, economic growth, and the labor market have raised concerns, but many economists argue that these surprises are not as alarming as they seem. Investors are still optimistic about the economy, with the S&P 500 near a record high and bets on interest rate cuts. However, some economists worry that current interest rates may not be providing enough drag on the economy. [Extracted from the article]

The Treasury Department is set to release its latest borrowing plan, which outlines how the government will borrow money to cover the gap between revenue and spending. This announcement has recently caused market volatility due to concerns about the federal budget deficit. However, market conditions are currently calmer, and investors expect the Treasury to increase auction sizes by the same amount as the previous quarter. There is still uncertainty about the announcement, and analysts predict that officials may surprise investors by going with a smaller increase to the 10-year note auction. Factors such as the deficit and the Federal Reserve's decisions could also impact the Treasury's borrowing plans. Additionally, the Treasury plans to introduce a new program to buy back certain Treasurys before their maturity date, which could affect auction sizes. [Extracted from the article]

Investors are hoping for a return to normalcy in 2024, seeking moderate inflation and middle-of-the-road interest-rate policies. While many don't expect the S&P 500 to match its 24% gain from 2023, they believe that a return to economic normalcy could lead to a reasonable and sustainable rise in stocks. However, there are concerns about inflation and the potential impact on interest rates. Rising rates have been painful, but they are seen as a more stable equilibrium compared to near-zero rates. Bonds offer solid returns if interest-rate expectations remain stable, but there are warnings that bond prices could fall if rate cuts take longer than expected. Higher yields are no guarantee of calm stock behavior, as some worry that stock prices are already too high relative to expected earnings. However, there is optimism that stocks can weather the competition from bonds, with the potential for new technologies to boost corporate profits. [Extracted from the article]

According to the Wall Street Journal, there is a debate on Wall Street about whether inflation has been successfully controlled. While many investors believe that inflation is under control and that the Federal Reserve will start cutting interest rates to prevent a recession, others are concerned that inflation may not decline enough and that stocks and bonds could be at risk. Proponents of optimism argue that inflation is likely to continue declining as pandemic effects fade, and that the Fed's interest rate hikes are still working their way through the economy. On the other hand, pessimists argue that the economy has not cooled enough, with job openings and wage growth remaining elevated. They also express concern that investor optimism about inflation could be self-defeating, leading to increased spending and potentially reigniting price pressures. [Extracted from the article]

Investors are increasingly betting that the Federal Reserve will cut interest rates in the near future, with a 52% chance of a rate cut by May 2024, according to interest-rate futures. This belief has led to a rally in the stock market, despite some concerns about the economy. While some investors anticipate a more benign outcome with steady growth and inflation falling back to the Fed's target, others are betting on a recession and more aggressive rate cuts. The Fed has not yet indicated that rate cuts are imminent, but has suggested that they may lower rates if inflation reaches their objective. [Extracted from the article]

The Treasury Department is adopting a more flexible approach to borrowing in response to swelling deficits and weak investor demand for long-term U.S. debt. This change has pleasantly surprised investors and led to a bond rally. However, some on Wall Street caution that deviating from the Treasury's usual "regular and predictable" debt sales strategy could lead to higher interest rates and increased volatility. The Treasury's borrowing decisions have implications for interest rates across the economy and could affect Americans who borrow to buy homes or cars. The U.S. national debt has surpassed $33 trillion, and the government may need to find new buyers for Treasury bonds. [Extracted from the article]

Yields, which fall when bond prices rise, were also pulled lower by soft economic data and hints from the Federal Reserve that it likely won't raise interest rates again this year. Just as some investors worry about a recession, others are concerned that it will still be difficult to achieve the Fed's inflation goal, especially after last week's bond rally made the cost of borrowing cheaper again. Markets Got an Unexpected Boost From Washington. [Extracted from the article]

The yield on the benchmark 10-year U.S. Treasury note reached 5% for the first time in 16 years, leading to a debate among investors about whether it has peaked or will continue to rise. The surge in Treasury yields has driven up borrowing costs across the economy, including 30-year mortgage rates, and has caused concerns about a potential recession. The yield curve, which reflects the relationship between short-term and long-term interest rates, has been inverted, with longer-term yields lower than short-term ones, indicating expectations of a future recession. However, recent economic growth and signs of accelerating growth have caused a reversal in this trend, with longer-term yields rising instead of falling. Other factors, such as supply-demand imbalances and global economic developments, may also be contributing to the increase in yields. Some investors see the 5% level as a ceiling for the 10-year yield, while others believe it could rise further. The Federal Reserve's future interest rate cuts and their impact on yields remain uncertain. [Extracted from the article]

Investors and Federal Reserve officials are concerned about the recent surge in U.S. Treasury yields, particularly due to the rise of a theoretical number known as the term premium. The term premium is the component of Treasury yields that reflects factors other than investors' expectations for short-term interest rates. Some financial models suggest that the term premium has been rising sharply, which has contributed to the increase in longer-term Treasury yields. However, economists caution that these models are imperfect estimates and it is difficult to determine if they are a warning. The debate surrounding the term premium is ongoing, with some attributing the rise in yields to a growing federal budget deficit, while others believe it is still driven by interest rate expectations. [Extracted from the article]

Keywords: wsjfinance; wsjfinance-markets; Economic Performance/Indicators; Monetary Policy; Interest Rates; Government Finance; Government Borrowing; Economic News; Debt/Bond Markets; Commodity/Financial Market News EN wsjfinance wsjfinance-markets Economic Performance/Indicators Monetary Policy Interest Rates Government Finance Government Borrowing Economic News Debt/Bond Markets Commodity/Financial Market News N.PAG N.PAG 1 03/16/23 20230314 NES 230314 Turmoil among banks sparks biggest one-day decline in short-term Treasury yields since 1987 Turmoil in the banking sector sparked the biggest one-day rally in short-term U.S. government bonds since 1987, with investors wagering that the economy has entered a new period of vulnerability that could halt the climb in interest rates. Wsjfinance, wsjfinance-markets, Economic Performance/Indicators, Monetary Policy, Interest Rates, Government Finance, Government Borrowing, Economic News, Debt/Bond Markets, Commodity/Financial Market News Before last Thursday, the Fed's tightening campaign had spurred investors to pile into bets that short-term yields would keep rising, a situation that left the market vulnerable to a sharp reversal if there was any shift in the fundamental outlook. [Extracted from the article]

Factiva Filters, Economic Performance/Indicators, Economic Growth/Recession, Economic News, Debt/Bond Markets, Commodity/Financial Market News, Government Debt/Bond Markets, National Government Debt/Bond Markets, Content Types, C&E Exclusion Filter Rising yields are largely a good sign for the economy, but bondholders are paying for robust growth and some investors suspect the Fed's rate message hasn't sunk in. Keywords: Economic Performance/Indicators; Economic Growth/Recession; Economic News; Debt/Bond Markets; Commodity/Financial Market News; Government Debt/Bond Markets; National Government Debt/Bond Markets; Content Types; Factiva Filters; C&E Exclusion Filter EN Economic Performance/Indicators Economic Growth/Recession Economic News Debt/Bond Markets Commodity/Financial Market News Government Debt/Bond Markets National Government Debt/Bond Markets Content Types Factiva Filters C&E Exclusion Filter N.PAG N.PAG 1 04/21/22 20220418 NES 220418 Rising yields are largely a good sign for the economy, but bondholders are paying for robust growth. [Extracted from the article]