Treasury Action: yields are edging higher as Wall Street has extended solid gains
Treasury Action: yields are edging higher as Wall Street has extended solid gains into the afternoon, having repaired about half of yesterday's damage. However, the selloff in Treasuries is still modest given uncertainties over the trade situation, the tame inflation outlook, and as the FOMC remains accommodative. Fed funds futures are still pricing in a rate cut by year-end (either due to slower growth and/or an insurance cut to boost inflation pressures) Also, European yields closed little changed. The 10-year Treasury is up about 2.3 bps to 2.425%, and compares to an overnight low of 2.392%. The 2-year is nearly 2 bps cheaper at 2.207%, versus 2.17% earlier. Wednesday's data on March retail sales, industrial production, and the May Empire State manufacturing report could make for some volatility, but analysts suspect trading should remain cautious near term.