10-year Treasury yield ticks lower as investors weigh economic data

The 10-year U.S. Treasury yield fell slightly on Tuesday as investors weighed the previous day’s data points and looked ahead to key inflation figures later in the week.

10-year yields were trading around 1 basis point lower at 4.2356% at 5:48 a.m. ET. The yield on the 2-year Treasury yield was flat at 4.5910%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

Stock market futures climbed early Tuesday, after the major indexes closed in the red the previous day following strong gains over recent weeks.

It comes as investors continue to assess the strength of the U.S. economy, when the Federal Reserve might start to cut interest rates — and how many times it could do so this year.

The latest reading of the Fed’s favorite inflation gauge, the personal consumption expenditures price index, is due to be released Friday and will be closely watched by markets.

Last week, the central bank indicated that rates will fall this year, although Chairman Jerome Powell stressed that the economic outlook remains uncertain. The number of cuts is also somewhat up in the air, with the Fed maintaining that there will be three cuts this year, but Atlanta Fed President Raphael Bostic saying he now expects just one rate reduction.

Deutsche Bank’s Jim Reid said in a note Tuesday that recent comments “underlined the upward narrowing of end-2024 rate expectations we saw in the FOMC dot plot last week (even as the median dot was unchanged at three cuts).”

Monday’s economic data releases came in “slightly on the softer side,” according to Reid.

New home sales fell unexpectedly in February to 662,000, below estimates of 675,000. The Dallas Fed manufacturing index for March also fell to -14.4, below expectations, although the Chicago Fed national activity index improved.

Data due Tuesday includes a March consumer confidence report, Richmond Fed’s manufacturing survey and durable goods orders.

There are also several auctions on the slate, including of 17-week, 4-week and 8-week Treasury bills.