Treasuries Show Significant Move To The Upside

After ending the previous session little changed, treasuries showed a strong move to the upside during trading on Wednesday.

Bond prices moved notably higher in morning trading and remained firmly positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 11.3 basis points to 3.093 percent.

Treasuries benefited from their appeal as a safe haven amid lingering concerns about tighter monetary policy triggering a global recession.

Traders also kept an eye on remarks by Federal Reserve Chair Jerome Powell, who participated in a panel discussion at the European Central Bank Forum on Central Banking alongside ECB President Christine Lagarde and Bank of England Governor Andrew Bailey.

Powell reiterated his previously shared belief that the U.S. economy is “well positioned to withstand tighter monetary policy” but cautioned there’s no guarantee the Fed can engineer a “soft landing.”

“We think that there are pathways for us to achieve the path back to 2 percent inflation while still retaining a strong labor market. We believe we can do that,” Powell said. “It’s obviously something that’s going to be quite challenging.”

The Fed chief once again declared his commitment to fighting inflation, arguing that failing to restore price stability poses a bigger risk to the economy than tightening monetary policy too aggressively.

In U.S. economic news, revised data released by the Commerce Department showed U.S. economic activity shrank by slightly more than previously estimated in the first quarter of 2022.

The report showed the decrease in real gross domestic product in the first quarter was revised to 1.6 percent from the previously reported 1.5 percent. Economists had expected the drop in GDP to be unrevised.

The slightly bigger than previously estimated decline in GDP in the first quarter came on the heels of the 6.9 percent spike in GDP in the fourth quarter of 2021.

A report on personal income and spending is likely to be in the spotlight on Thursday, as it includes a reading on inflation said to be preferred by the Fed. Reports on weekly jobless claims and Chicago-area business activity may also attract attention.

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