This post was originally published on this site
Treasury yields were little changed on Friday, with the exception of the 2-month bill rate, as traders assessed the latest developments in the debt-ceiling issue and remarks by Federal Reserve Chairman Jerome Powell.
What’s happening
- The 2-month T-bill rate rose to 5.239%, up 22.1 basis points from Thursday’s close of 5.018%, after rising to an intraday high of 5.27%, according to 12 p.m. Eastern time data from Tradeweb.
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.246%
slipped to 4.247% from 4.269% on Thursday. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.673%
was 3.672%, up slightly from 3.647% as of Thursday afternoon. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.935%
was 3.93%, up from 3.901% on Thursday.
What’s driving markets
Financial markets were reacting to reports that debt-ceiling negotiations have stalled. Republican Rep. Garret Graves of Louisiana, a key ally of House Speaker Kevin McCarthy, described the talks as being at “a pause” on Friday.
The debt-ceiling developments appeared to override remarks made by Powell, who said in a panel appearance on Friday that the benchmark interest-rate target range might not need to rise as much as it otherwise would because banks are tightening credit. Powell also said the Fed hasn’t made any decisions about whether more rate hikes will be appropriate.
Meanwhile, Treasury Secretary Janet Yellen told bank chief executives that more mergers may be necessary, according to a report from CNN.
Markets reduced the likelihood of June Fed rate hike, dropping them to 22.4% from 35.6% on Thursday, according to the CME FedWatch Tool. Fed funds futures traders now see a 77.6% likelihood that the Fed will keep borrowing costs between 5% and 5.25% next month.
