The market for Treasuries was relatively calm in comparison to stocks, which sold off after some Federal Reserve officials stirred investor concerns over the outlook for interest rate cuts this year.
“If equities are selling off because Kashkari said we might have no cuts this year, you’d expect [Treasury] yields to rise,” Mike Zigmont, head of trading and research at Harvest Volatility Management, said of Thursday comments by Minneapolis Federal Reserve president Neel Kashkari.
“This could just be investors dumping equities as part of a risk-off move,” Zigmont said. “If the market is reacting to Kashkari, the dollar should be being bought up, and it’s not.”
The yield on the two-year Treasury was down 0.02 percentage points at 4.65 per cent, while the dollar index was down 0.1 per cent.
Thierry Wizman, global interest rates and currencies strategist at Macquarie Group, said Fed chair Jay Powell “sounded very dovish” following the central bank’s March rate decision “and yet the dovishness he expressed was not consistent with the Fed’s official communications that day”.
“Speakers today like Kashkari and [Austan] Goolsbee may be trying to push the center away from Powell’s views. They were expressing cautiousness on rate cuts that may be warranted given the data that we have seen in the past week.”
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