The 10-year benchmark US Treasury (US10Y) closed today at 2.026%. May and June saw the US10Y continue it’s 2019 decline all the way down to 1.94% on 7/5/2019. After a brief and subtle recovery back above the 2.00% mark, the US10Y in headed back down after the Federal Reserve’s President John Williams made comments on how the central bank should act preemptively as the economy slows. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” Williams said in his address.
His comments have many experts believing that the Fed will cut interest rates at the end of July. The Fed quickly made a press announcement that John Williams comments were not intended to insinuate that the Fed would be cutting rates at the end of this month, but rather an acknowledgment that they have their finger on the pulse and are ready to act if and when needed.
The US10Y will likely see movement worth focusing on through summer and on into the end of 2019. This lengthy positive economic run has a hyper-sensitive Fed ready to make necessary adjustments to assure any pullback isn’t reflective of the last recession. Rates should continue to be on everyone’s radar.