NEW YORK — Yields on US Treasuries fell on Monday as Federal Reserve vice-chair Michelle Bowman unexpectedly signaled the first interest rate cut this year could come as soon as July.
Markets also saw Iran’s response on Monday to US attacks on its nuclear sites over the weekend as a sign that further escalation of the conflict is unlikely.
Bowman, recently tapped by US President Donald Trump to be the central bank’s top bank overseer, said she is growing more concerned about risks to the job market than the potential inflationary effects of tariffs.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, fell 5.7 basis points to 3.851 percent.
But investors still see little chance of a rate cut in the July meeting, anda 77 percent chance of rates being steady, according to CME’s FedWatch tool. That percentage barely changed following Bowman’s comments.
“I was surprised by her comments, a rate cut in July is not the consensus in the market,” said Will Compernolle, macro strategist at FHN Financial in Chicago
