Insignia Consultants | Bonds bask in talk of Fed interest rate cuts

Bonds bask in talk of Fed interest rate cuts

LONDON, Nov 29 (Reuters) - Treasury yields and the dollar hit multi-month lows on Wednesday after a U.S. Federal Reserve official made fresh hints of interest rate cuts, while stocks gained ground on hopes of easing inflation.

Fed funds futures rallied on the remarks to price in more than hundred basis points (bps) of cuts in 2024 and a 40% chance they begin as soon as March. Two-year Treasury yields fell sharply and touched fresh lows in the Asia session.

The two-year yield hit its lowest since mid-July at 4.69% and the benchmark 10-year yield fell 6 bps to its lowest since September at 4.28%.

Euro zone sovereign bond yields also fell and markets increased bets on rate cuts after data from North Rhine-Westphalia, Germany's most populous state, supported expectations for a drop in German inflation.

The dollar index , which tracks the currency against six peers, hit its lowest since early August at 102.46.

The dollar fell 0.2% at 147.70 yen , having earlier traded at its lowest since mid-September. It touched a 3-1/2 month low at $1.1017 per euro .

Federal Reserve Governor Christopher Waller - an influential and previously hawkish voice at the U.S. central bank - told the American Enterprise Institute on Tuesday that rate cuts could begin in a matter of months, provided inflation keeps easing.

Waller's remark echoed earlier comments made by Fed Chair Jerome Powell.

https://www.reuters.com/markets/global-markets-wrapup-1-2023-11-29/

---