Federal Reserve Uncertainty: Will Interest Rates Be Cut in the Near Future?

The recent economic data showed resilience in the face of high-interest rates and persistent inflation, sparking questions about the timing of potential interest rate cuts by the Federal Reserve this year. Investors were assessing the data amidst uncertainty about the state of the economy and its potential impact on Federal Reserve monetary policy decisions. At 4:54 a.m. ET, the 10-year Treasury yield was up by more than two basis points to 4.6273%, while the 2-year Treasury yield had risen by over three basis points to 4.9414%. Yields and prices move in opposite directions, with one basis point equaling 0.01%.

Investors were closely monitoring any hints about the future of monetary policy as the Federal Reserve’s next meeting is scheduled for April 30-May 1, where rates are expected to remain unchanged. Expectations for rate cuts have been pushed back in recent weeks, leading to speculation about the possibility of fewer cuts than previously anticipated. More economic data is expected in the coming week, including durable goods orders on Wednesday, a first-quarter domestic product reading on Thursday, and the personal consumption expenditures price index on Friday.

The S&P Global Flash manufacturing PMI for the U.S. was reported at a four-month low of 49.9 for April, indicating contraction in the sector as readings below 50 suggest. This data suggested a slight easing in