10-year Treasury yield hits highest level since November as bets on June rate cuts cool down

The
10-year
Treasury
note
yield
jumped
Tuesday,
adding
to
its
gains
from
the
previous
session,
as
traders
reassessed
the
possibility
of
the
Federal
Reserve
cutting
rates
in
June.

The
benchmark
rate
was
up
2.6
basis
points
at
4.355%.
It
previously
reached
its
highest
level
since
Nov.
28,
briefly
breaking
above 4.4%.
The
2-year
Treasury
note
yield
was
down
2.5
basis
points
at
4.693%.

Yields
and
prices
move
in
opposite
directions,
and
one
basis
point
equals
0.01%.

The
moves
come
after
manufacturing
in
the
U.S.
expanded
for
the
first
time
since
Sept.
2022,
according
to
data
released
Monday
by
the
Institute
for
Supply
Management.
The

ISM
manufacturing
index
rose
to
50.3,
up
from
47.8
in
February
and
significantly
better
than
the
48.1
Dow
Jones
consensus
estimate.
The
index
measures
the
percentage
of
companies
reporting
expansion
against
contraction,
so
anything
over
50
indicates
growth.

Odds
for
a
June
rate
cut
based
on
fed
futures
trading
are
now
down
to
roughly
63%,
off
from
about
70%
a
week
ago,
as
investors
remain
cautious
about
the
direction
of
rate
cuts
moving
forward,
according
to
the

CME
FedWatch
Tool.
Markets
interpreted
the
unexpected
return
of
U.S.
manufacturing
growth “as
reducing
the
chances
of
meaningful
Fed
rate
cuts,”
Dutch
bank
ING

said
in
a
research
note.

Last
month,
the
U.S.
central
bank

left
interest
rates
unchanged
for
the
fifth
consecutive
time,
in
line
with
expectations,
keeping
its
benchmark
overnight
borrowing
rate
in
a
range
of
5.25%-5.5%.
The
Fed
also
said
at
the
time
that
it
still
expects
three
quarter-percentage
point
cuts
by
the
end
of
the
year.

“The
Fed
is
playing
things
cool.
And
the
data
has
cooperated
with
that
notion,”
Gregory
Faranello,
head
of
U.S.
rates
strategy
at
AmeriVet
Securities,
wrote
in
a
note
Monday. “For
now,
market
pricing
is
embracing
three
cuts
with
a
lean
toward
a
June
start
date.
But
it’s
tight
depending
on
how
the
data
unfolds.”

—
CNBC’s
Jeff
Cox
and
Fred
Imbert
contributed
to
this
report.