Yahoo FinanceUS Treasuries Rally as Faith in Fed Pivot Grows: Markets Wrap

(Bloomberg) -- Treasuries rose, with the 10-year benchmark yield trading near the lowest since March, as traders put their faith in the Federal Reserve to begin an easing cycle in September.
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Contracts for the S&P 500 were steady as traders await US retail sales data later for fresh insights on whether inflation and growth have cooled enough to satisfy policymakers who are deliberating when it’s safe to begin bringing down interest rates.
A soft reading of US retail sales could help fuel the rally in Treasuries, according to strategists at UniCredit SpA led by Marco Valli, global head of research. They expect the Fed to deliver three rate cuts this year, starting in September, and recommend positioning for the yield curve to steepen. So-called steepener trades favor buying short dated notes and selling long bonds.
Fed Chair Jerome Powell said Monday that inflation is heading toward the central bank’s 2% goal on the basis of second-quarter economic data.
“September seems to be a lock-in” for a Fed rate cut, Bruce Richards, the chief executive officer of Marathon Asset Management, said in an interview with Bloomberg TV.
Results from Morgan Stanley and Bank of America Corp. will also influence the mood in markets after fellow banking giant Goldman Sachs Group Inc. reported a surge in earnings Monday.
The dollar strengthened against most of its Group-of-10 peers, with trading driven by speculation that Donald Trump is in a stronger position to win the US presidential election. The yen declined against the greenback on wagers that the Japanese currency will remain weak during a second Trump term.
China traded lower as Trump’s selection of JD Vance as his running mate triggered further trade and geopolitical concerns in the region.
New tariffs of 60% on all Chinese exports to the US would more than halve China’s annual growth rate, according to UBS Group AG, underscoring the risks for Beijing if Trump returns to the White House. Vance told Fox News that China is the biggest threat to the US.
European equities slipped after Hugo Boss cut its profit guidance in the face of weaker demand for high-end fashion. Miners were the worst-performing industry group, as Rio Tinto Group declined after giving disappointing guidance on its copper operations.