NEW YORK (dpa-AFX) – US government bonds lost initial gains on Thursday and fell slightly. The rally that has been running since the end of October has stalled somewhat. The futures contract for ten-year bonds (T-Note Future) fell by 0.11 percent to 112.66 points. In return, the yield on ten-year government securities rose to 3.90 percent after temporarily falling to its lowest level since the end of July.
Government bonds initially received a boost in price from new economic data. On the one hand, growth in the US economy in the summer quarter was weaker than previously known. On the other hand, price inflation became weaker, as measured by the PCE indicator, which is given particular attention by the US central bank Fed. In the third quarter, PCE rose by 2.0 percent – instead of the previously estimated 2.3 percent.
The bottom line is that the data makes Fed rate cuts somewhat more likely. The central bankers have been pursuing a tight monetary policy for a long time against the once very high inflation. Because inflation is falling and the economy is expected to cool down, the financial markets are expecting significant interest rate cuts next year.
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