Attention will now turn to next week’s consumer price index reading to see whether the Fed is managing to beat back inflation. Concerns about the health of banks and the pace of credit creation will also be uppermost in investors’ minds as they try to assess the prospects for a recession and future yield moves.
Bond traders are betting that the Federal Reserve probably has one more interest-rate hike to go in this tightening cycle as the economy shows resilience — for now at least — despite recent banking turmoil.
Treasury yields advanced in a holiday-shortened session Friday after a drop in US unemployment and stronger-than-anticipated payrolls figures provided support for another quarter-point rate increase at the next Fed meeting in May. Swaps now show the odds of that at more than two-in-three.
