The US dollar was flat and Treasury yields erased the red ink on abysmal economic data that might drive the monetary policy path ahead. The greenback’s rally has stalled, even with expectations of higher-for-longer interest rates. What about recession talk?
Durable goods orders plummeted 6.1% in January, down from a downwardly revised -0.3% in December, according to the Census Bureau. This represented the worst monthly reading since the early days of the coronavirus pandemic.
The Federal Reserve Bank of Richmond’s Manufacturing Index, Shipments, and Services Indexes were all stuck in contraction mode in February. The Dallas Fed Services Index was also in negative territory.
Additionally, The Conference Board’s Consumer Confidence Index weakened in February following three straight months of gains.
“The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, Chief Economist at The Conference Board, in a statement. “The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000. Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.”
Financial markets used these figures to assess the health of the US economy amid elevated interest rates and above-trend inflation.
The benchmark ten-year Treasury yield hit 4.31%. The two-year yield was flat at 4.71%, while the 30-year bond touched 4.43%.
This week’s leading events will be the second GDP growth estimate for the fourth quarter and the personal consumption expenditure (PCE) price index.
The numbers will likely play a crucial role in the Fed’s upcoming policy decisions.
According to the CME FedWatch Tool, the futures market is penciling in a rate cut in June.
The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, erased most of its losses on Tuesday and stood at 103.80.
The USD/CAD currency pair rose 0.19% to 1.3532, from an opening of 1.3507, at 18:21 GMT on Tuesday. The EUR/USD slipped 0.06% to 1.0847, from an opening of 1.0854.