Treasury Yields Drop as Investors Await Delayed Data

• The 10-year Treasury yield fell 3 basis points to 4.02%, and the 30-year bond yield dropped 3 basis points to 4.66%
• Investors are expecting critical delayed economic data including November and December housing data and December's PCE index (the Fed's preferred inflation gauge) on Friday
• Markets are pricing in a 90% probability that the Federal Reserve will keep interest rates unchanged in the 3.50%-3.75% range at the next meeting

Summary: Treasury Yields Drop as Investors Await Delayed Data

Key Market Movements:

U.S. Treasury yields declined on Tuesday during a holiday-shortened trading week. As of 3:34 a.m. ET:

• 10-year Treasury yield fell 3 basis points to 4.02%
• 30-year bond yield dropped 3 basis points to 4.66%
• 2-year note yield decreased 2 basis points to 3.388%

Market Context:

The bond market was closed Monday for Presidents' Day, leading to a quiet start to the week. Yields move inversely to prices, with one basis point equaling 0.01%.

Upcoming Data Releases:

Investors are focused on several delayed economic reports, including:

• Tuesday: ADP Employment Change report, February Empire Manufacturing Index, NAHB Housing Market Index
• Wednesday: FOMC minutes and delayed housing data for November and December
• Friday: December Personal Consumption Expenditures (PCE) index—the Federal Reserve's preferred inflation gauge

Monetary Policy Outlook:

Market participants will scrutinize the FOMC minutes for insights into the Fed's last interest rate decision and future policy direction. According to current market pricing, traders are assigning a 90% probability that the Federal Reserve will maintain interest rates unchanged in the 350-375 basis point range (3.50%-3.75%).

Market Implications:

The subdued yield movement reflects investor caution as they await critical economic indicators that could influence Fed policy decisions. The delayed data releases and FOMC minutes are expected to provide clarity on inflation trends and monetary policy trajectory, which will be crucial for fixed-income positioning.