Traders are assessing the timeline of rate cuts

Traders are assessing the timeline of rate cuts – U.S. Treasury yields rose on Monday following comments from Minneapolis Federal Reserve President Neel Kashkari indicating the central bank may not cut rates until December.

The 10-year treasury Rates were trading about 7 basis points higher at 4.281%. The 2 year treasury Banknote yields also rose by 8 basis points to 4.765%.

Yields and prices move in opposite directions. One basis point corresponds to 0.01%.

The increase comes after Kashkari said this in an interview on Sunday CBS News that it was a “reasonable prediction” that the Fed would not cut rates until December, adding that more evidence was needed “to convince us that inflation is well on its way back to 2%.”

“It will really depend on the data,” Kashkari said. “We are currently in a very good position to take our time, [to] Get us more inflation data, more data on the economy and the labor market, before we have to make decisions. … But if you were to just say there will be one cut, as the median indicates, it would probably be by the end of the year.”

Last week, the producer price index – a measure of wholesale inflation – came in lower than expected for May, fueling hopes of a Fed rate cut and sending Treasury yields lower. The central bank opted last week to keep interest rates stable at 5.25% to 5.50%, and indicated that there would be only one rate cut this year.

The key data coming out this week includes May retail sales, which are expected on Tuesday. The data on house sales and house starts will appear later this week.

Monday marks the start of the short week in the US, with markets closed on Wednesday for the Juneteenth holiday.

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