Treasury yields decline following data supporting Fed’s soft landing

US Treasury bond yields have been declining since the beginning of trading on Wall Street, after US economic data favouring the “flexible landing” scenario and that the Federal Reserve could be closer to achieving it.

Ten-year US Treasury bond yields fell to 4.131%, compared to the last daily close, which recorded 4.181%. Yields on benchmark bonds rose to their highest levels on the current trading day at 4.195%, compared to the lowest levels recorded at 4.119%.

The US GDP price index recorded an increase of 1.5% in the last quarter of last year, which was lower than the reading recorded in the third quarter of 2023.

Although the actual reading was lower than the previous one, it confirms that the US economy is still in the growth zone and that it was able to avoid contraction at the end of last year.

The weekly jobless claims recorded an increase of 214,000 claims in the week ending January 19, compared to the previous reading, which recorded 189,000 claims, which was higher than market expectations that indicated 200,000 jobs.

The total number of beneficiaries of unemployment benefits in the United States also rose to 1.833 million beneficiaries in the week ending January 12, compared to the previous reading, which recorded 1.806 million beneficiaries, which exceeded market expectations that indicated 1.828 million beneficiaries.

These batches of data raised speculation that the Federal Reserve will not be in a rush when considering the timing to start to cut interest rates, as it appears to be close to achieving the “flexible landing” scenario, which includes achieving the goal of reducing inflation without the US economy entering a recession.