Traders work on the floor of the New York Stock Exchange on Feb. 13, 2025
Danielle DeVries | CNBC
The 10-year Treasury yield fell to its lowest level since December as more signs emerged that the economy may be slowing, leading traders to bid up fixed income prices.
Benchmark 10-year Treasury yields moved down nearly 10 basis points to 4.294%, and the 2-year Treasury yield slipped more than 6 basis points to 4.098%. One basis point equals 0.01%, and yields and prices move inversely, meaning yields fall when prices rise.
The Conference Board’s latest consumer confidence survey came in at 98.3 in February, short of economists’ consensus estimate of 103.0 and down from 105.3 last month. The Philadelphia Federal Reserve said its services index tumbled to -12.9 in February, the lowest since April 2023, from 2.2 in January, while its sales/revenue index fell 15 points to -12.7, its lowest since May 2020.
“The economy is about to have the rug pulled out from under it as Washington policies are causing a rapid loss of confidence on the part of consumers,” said Chris Rupkey, chief economist at FWDBonds. “The economy is coming in for crash landing this year. Bet on it. The bond market is,” Rupkey added.
Worries are also swirling around President Donald Trump potentially imposing tariffs on two of the three largest U.S. trading partners. Trump said Monday that tariffs on Canada and Mexico “will go forward” after the deadline for the monthlong delay ends next week.
Tuesday’s numbers also come after a series of shaky economic data releases last week. The University of Michigan’s consumer sentiment index dropped more than expected in February, and existing home sales in January declined. The S&P Global Purchasing Managers’ Index for February also fell short of economists’ forecasts, all of which combined to raise concerns over the pace of U.S. economic expansion.
Traders are now turning to the personal consumption expenditures index for January that is scheduled for release on Friday. As the Federal Reserve’s favorite inflation measure, it plays a major role in shaping the central bank’s interest rate decisions. The central bank’s policy committee next meets to decide on rates in three weeks, on March 18-19.
Earlier this month, following a stronger-than-anticipated CPI report in January, Federal Reserve Chair Jerome Powell indicated that the Fed will not hurry to further lower interest rates after cutting the benchmark fed funds rate a full percentage point, to a range of 4.25% to 4.50%, from September to December last year.
