He US 10-year Treasury bond yield climbed this Wednesday to 4.72% and marks its highest level since the end of April last year after the solid economic data feed the expectations of a Federal Reserve (Fed) more aggressive. However, in the last few hours the performance has moderated and stood at 4.67%. In fact, ISM December services reached 54.1 points from 52.1 the previous month and showed an increase in prices, which has fueled the concerns about persistent inflation and raises questions about the future path of rate cuts. «This, which in principle could be considered positive, was very negatively received by investors, even more so considering that the ISM report pointed to a significant rebound in inflationary pressures in the services sector in the month analyzed«, they indicate in Link Securities. Likewise, the Survey of Job Offers and Labor Rotation (JOLTS) announced a greater number of job offers than expected. «Better-than-expected US data fueled 'hawkish' Fed expectationspushed US yields higher and further delayed the expectation of the next rate cut. A cut in May is now a toss-up, and many believe that The Fed may want to wait until June to announce its next rate cut«, assesses Ipek Ozkardeskaya, senior analyst at Swissquote Bank. For their part, for Bankinter experts «the start of 2025 should offer flat or slightly bearish balances for a while. At least, until inflation and rates are clarified. We insist that inflation will rebound more than expected and that rates will fall less than expected. That is already happening. That's why bond IRRs continue to rise«. «All of this For now, the possibility of the Fed continuing its rate reduction process is ruled out of interest, at least in the short term,» they add in Link Securities. In this sense, and ahead of its meeting on January 29, the market discounts, with a 95.2% probability according to the CME FedWatch tool Group, that the US central bank will make a pause in its monetary flexibility process.
