Treasuries See Further Upside Amid Optimism About Rate Cut

(RTTNews) - Treasuries moved higher over the course of the trading day on Tuesday, extending the upward move seen over the two previous sessions.

After advancing in morning trading, bond prices remained firmly positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, decreases by 4.9 basis points to 3.818 percent.

Treasuries continued to benefit from optimism about the outlook for interest rates ahead of key events later this week.

Traders are likely to analyze the minutes of the Federal Reserve's latest monetary policy meeting, which are due to be released on Wednesday, for additional clues about the likelihood of a rate cut next month.

Later in the week, remarks by Fed Chair Jerome Powell and other Fed officials at the Jackson Hole Economic Symposium are also likely to attract attention.

According to CME Group's FedWatch Tool, there is a 71.5 percent of a quarter point rate cut next month and a 28.5 percent chance of a half point rate cut.

"September is being tipped as the month for that first Fed cut after inflation finally dropped below 3%," said Danni Hewson, AJ Bell head of financial analysis. "How far Jay Powell and the FOMC will go, how deep that first cut will be, and whether or not it could be the only one delivered this year are now the questions on investors' lips."

She added, "Nerves that the Fed had been too slow have been somewhat allayed, but every word spoken at this week's Jackson Hole Symposium will still be scrutinized."

Early trading activity on Wednesday may be somewhat subdued ahead of the afternoon release of the minutes of the latest Fed meeting.