On Friday, a downward trend was observed in the interest rates of government bonds.
More detailed information is now being anticipated by the market about the timing of future interest rate reductions.
On Thursday, Christopher Waller, one of the decision-makers at the Federal Reserve, the central bank of the United States, expressed his desire for evidence of a decrease in inflation before interest rates are lowered.
“I require a few more months of inflation data before I can decide whether the slowdown in January was just a minor dip or something more significant,” Waller stated according to CNBC’s information.
Inflation in January was more rapid than expected, sparking worries about the ability to control inflation more consistently than previously anticipated.
Christine Lagarde, President of the European Central Bank, commented on Friday that wage growth data for Q4 2023 was moderately positive but not sufficient to provide the ECB with confidence about overcoming inflation.
On Thursday, there was an increase in U.S. government bond yields following the release of purchasing managers’ index data, but the movement was less pronounced for longer yields compared to shorter yields.
“Despite a slight shortfall in the services purchasing managers’ index for the US, the data does not point to a significant economic slowdown. The data lends support to the notion that the US central bank will proceed with interest rate hikes,” Nordic bank analysts assessed in their morning review.
“Central bank decision-makers have postponed market expectations for interest rate cuts with their comments. Phillip Jefferson of the Fed expressed cautious optimism about inflation reaching the central bank’s target this year. Patrick Harker of the Philadelphia Fed cautioned against premature expectations for interest rate cuts. The market is currently pricing the first rate cut in June with about a 65 percent probability,” the analysts added.
On Friday, during the review, the interest rate on the two-year government bond in the US was down by 0.5 percent at 4.707 percent. The ten-year loan rate was lower by 0.2 percentage points, standing at 4.319 percent.
The two-year government bond rate in Germany was down by 2.2 percent at 2.875 percent. On the other hand, the ten-year rate was down by 2.6 percentage points at 2.412 percent.
In the foreign exchange market, the dollar lost ground against nearly all major currencies.
At 2:42 p.m., the exchange rates were as follows: 1 euro was equal to 1.08 dollars, 163.10 yen, 0.85 pounds, and 11.16 Swedish kronor. The dollar was worth 150.48 yen, and the pound was 1.27 dollars.
