On Tuesday, U.S. Treasury yields remained relatively stable as investors analyzed the latest economic data and its potential impact on the economy. The 10-year Treasury yield was down by less than one basis point at 4.3943%, while the 2-year Treasury yield also saw a slight decrease to 4.8162%.
Yields and prices of Treasurys move in opposite directions. One basis point represents a change of 0.01%. The previous day had seen yields drop significantly, with the 10-year Treasury yield falling by nearly 12 basis points following reports of a contraction in the manufacturing sector.
The ISM manufacturing index for May came in at 48.7, falling below the expected figure of 49.6. A reading below 50 indicates a contraction in the sector. Investors are now awaiting the release of the ISM services index and the May jobs report later in the week for further insights into the economy.
The Federal Reserve is set to meet next week, with expectations that interest rates will remain unchanged. Investors will be paying close attention to any indications from policymakers about the future trajectory of monetary policy. The Fed remains cautious about potential inflation impacts and is seeking more data to make informed decisions.
In Europe, the European Central Bank is anticipated to announce its first interest rate cut since 2019. This decision comes as central banks around the world continue to navigate economic recovery and inflation concerns.