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Investors scrutinize U.S. Treasury yields amid economic data evaluation

The U.S. economy showed signs of growth as manufacturing expanded for the first time in 17 months, according to data released by the Institute for Supply Management on Monday. The ISM manufacturing index increased to 50.3, up from 47.8 in February and surpassing the 48.1 Dow Jones consensus estimate. This unexpected growth was seen as reducing the likelihood of significant Fed rate cuts, as the odds of a rate cut in June fell to around 58.8%, down from about 70% a week earlier, based on fed futures trading.

The benchmark rate climbed almost 7 basis points to 4.397%, reaching its highest level in two weeks and close to the peak levels of the year. In contrast, the 2-year Treasury note yield rose nearly 1 basis point to 4.726%. Yields and prices move in opposite directions, with one basis point equivalent to 0.01%.

Investors remained cautious about the possibility of rate cuts in the future, as they reconsidered the possibility of a Fed cut in June following news that manufacturing had expanded for the first time in over a year and half years ago, respectively . The Fed is taking a cautious approach and data is aligning with their stance, according to Gregory Faranello, head of U.S rates strategy at AmeriVet Securities who noted that market pricing currently indicates anticipation of three cuts

By Samantha Jones

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