Global markets took a hit as Wall Street slipped, impacting global shares. Meanwhile, Treasury prices surged as investors anticipated a gentle landing for the U.S. economy just before the Federal Reserve wrapped up its policy meeting.
Investors are eagerly watching for signals of potential interest rate cuts, with a 63% probability of a March cut, according to the CME Group’s FedWatch Tool.
The U.S. dollar softened against the euro and yen ahead of the 19:00 GMT Fed statement and Chair Jerome Powell’s subsequent press conference. While a steady interest rate is expected, investors are on the lookout for signs of possible future cuts.
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Treasury yields slid as investors drove up prices on signs of slowing labor costs and a weaker-than-expected private payroll reading. Earlier data indicating a robust economy had pushed prices down on fears of delayed rate cuts.
The two-year Treasury yield, reflecting interest rate expectations, dropped by 15.4 basis points to 4.205%, and the benchmark 10-year note yield fell by 10.5 basis points to 3.952%.
The dollar index posted an almost 2% gain against major currencies this month, its most significant rise since September, reflecting revised expectations for rate cuts.
The yen strengthened by 0.89% at 146.04 per dollar, on track for its most extensive monthly decline since June 2022, with a projected 4.5% drop by month-end.
