US Treasury yields rose on Monday, ahead of key economic data on retail sales and import prices on Tuesday, and the Federal Reserve’s policy meeting, capped by its release of updated economic and interest rate projections on Wednesday.
Economists expect Tuesday’s data to show that import prices fell 0.2 percent in May, compared with a 0.1 percent gain the prior month. The figures will feed into the Personal Consumption Expenditures Index due later this month, which is the Fed’s preferred inflation measure. Retail sales are expected to decline 0.7 percent on the month.
The US central bank is expected to keep rates unchanged when it concludes its two-day meeting on Wednesday, but traders will focus on policymakers’ updated interest rate projections for this year.
“Everyone is going to be focused on the 2025 dot – whether or not that gets revised from 50 basis points” in cuts, said Vail Hartman, US rates strategist at BMO Capital Markets in New York.
Fed officials have indicated that they may keep rates higher for longer on concerns that the Trump administration’s tariffs will lead to an uptick in inflation.
Fed funds futures traders are pricing in a 65.2 percent probability of 50 basis points or more in rate cuts by December, a 28.2 percent likelihood of one 25-basis-point cut and a 6.6 percent chance the Fed will leave rates unchanged, according to the CME Group’s FedWatch Tool.
