The 10-year US Treasury note yield, seen as a proxy for borrowing costs worldwide, consolidated around 3.6% as investors parsed through new economic data while assessing the impact of the Federal Reserve’s rate-hiking path. US business activity accelerated to an 11-month high in April, easing concerns that the world’s largest economy is on the brink of a recession but throwing cold water into expectations that the central bank will soon end its historic tightening campaign.
It contrasted with data released on April 20th which showed the Philadelphia Fed manufacturing index sank more than expected while initial jobless claims unexpectedly rose for the second week and continuing claims hit the highest since November 2021. Money markets priced in a 25bps increase in the fed funds rate next month, while a cut is likely by the end of the year.