Treasuries Decline as US Factory Data Sparks Rate Speculation: Market Overview

3M sign outside building

US manufacturing shows growth for the first time since 2022, signaling a robust economy. Market participants are closely monitoring Federal Reserve speakers for insights into future monetary policy decisions. Solid US manufacturing data has led to a downturn in the bond market and a halt in stock market gains, as expectations grow that the Federal Reserve may delay interest rate cuts.

US Treasury yields, particularly the 10-year, surged following a report indicating an unexpected expansion in manufacturing activity and rising input costs since September 2022. This development has reduced market anticipation of Federal Reserve rate cuts to below 70 basis points for the year. Meanwhile, stocks dipped slightly after the S&P 500 recorded its fifth consecutive month of gains, raising the possibility of a market correction. Upcoming employment data is projected to show continued job growth in March with stable wage increases, suggesting a strong labor market with minimal inflation risk. Federal Reserve Chair Jerome Powell, scheduled to speak on Wednesday, recently emphasized the need for further evidence of inflation control.

The S&P 500 experienced a drop after achieving its 22nd record high this year, with significant losses in major companies like Tesla Inc. and Apple Inc. Additionally, AT&T Inc. saw a decline after disclosing a data breach affecting approximately 73 million current and former customers.

In currency markets, the dollar strengthened against its major counterparts.

Corporate Developments:

  • Micron Technology Inc. ( $MU) saw its shares rise after Bank of America Corp. increased its price target for the semiconductor company.
  • United Parcel Service Inc. ( $UPS) announced a major air cargo contract with the United States Postal Service, becoming its primary provider.
  • A federal court has approved 3M Co.’s ( $MMM) settlement proposal of at least $10 billion for PFAS contamination claims affecting around 12,000 US public water systems.
  • Advent International is reportedly nearing a deal to acquire Canadian payment processor Advent International., indicating a resurgence in private equity transaction confidence.

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Treasuries Decline as US Factory Data Sparks Rate Speculation: Market Overview

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