Treasury Yields Hold as Oil Rises, Fed Cut Odds Near 25%
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- 10-year Treasury yield was down less than 1 basis point at 4.287% on Thursday.
- 2-year Treasury yield fell more than 1 basis point to 3.783%, reflecting sensitivity to short‑term Fed decisions.
- Oil prices rose, with West Texas Intermediate futures up >3% to $97.87 per barrel and Brent up >1% to $95.92 per barrel, after a brief slide from the US‑Iran ceasefire.
- CME FedWatch shows traders pricing a near‑25% probability of a Fed rate cut by year‑end, up from Wednesday.
- Personal consumption expenditure price index met February expectations with a 0.4% monthly rise and 2.8% year‑over‑year gain; core PCE was in line, but annualized pace over 4% and core over 4.5% per Sonu Varghese.
- Jobless claims for the week ended April 4 were 219,000, above the 210,000 forecast.
- Fed minutes from March indicate policymakers remain open to future hikes if inflation stays above 2%, emphasizing nimbleness.
Why it matters: Investors in Treasury bonds benefit from the stability, while oil‑sensitive sectors face higher input costs; the heightened probability of a Fed rate cut could lower borrowing costs for borrowers, but lingering inflation pressures and a volatile oil market keep the outlook uncertain for both bond and equity markets.
