US bond yields fall on economic slowdown concerns

The yield on the bonds Tesoro US fell on Wednesday, reflecting concerns about a economic slowdown before the meeting of the Federal Reserve of the next week in which interest rates will be set.

The Fed raised its overnight reference rate by 4.25 points percentage points last year to fight inflation at multi-decade highs, but the rapid tightening of monetary policy – the fastest since the 1980s – has led investors to weigh inflation fears against recessionary fears, and markets fluctuate between the two.

Following a series of sharp rate hikes last year, the US central bank is now expected to raise rates by 25 basis points next week, amid signs that inflation is cooling.

The prospect of a slower pace of tightening recently reinforced some expectations of a soft landing, a scenario in which inflation falls by a context of weak economic growth but resistant.

However, fears of a forthcoming economic contraction weighed on markets on Wednesday, after dismal earnings forecasts from Microsoft Corp the day before weighed on sentiment for growth stocks as investors focused on corporate earnings reports. to assess the impact of the increases and gauge whether the recent enthusiasm for such actions will continue.

“The results of the technology companies clearly showed a perspective of macroeconomic slowdown. The January rally could have come to an end if the rest of the results of the big technology and multinationals present the same pessimistic perspective,” Edward Moya said in a note. , OANDA Market Analyst.

The yield on 10-year bonds fell one basis point to 3.458%, and that on two-year notes, which tends to better reflect monetary policy expectations, fell to 4.137 percent.

One part of the widely followed yield curve, which measures the difference between those two maturities, remained inverted at -68.1 basis points. The inversion of this curve has predicted eight of the last nine recessions, according to analysts.

The Treasury auctioned off $43 billion in five-year bonds with a yield of 3.530 percent.