US Treasury bonds rallied as new economic data showed slowing economic activity and inflation, strengthening expectations for two Federal Reserve interest rate cuts in 2025.
Two-year and 10-year yields dropped by about 10 basis points. Market traders are now pricing in rate cuts as early as September, despite major Wall Street firms recently pushing back their forecasts for Fed action.
Meanwhile, concerns about the US fiscal outlook remain, with Republican tax cut plans and high government debt potentially risking higher inflation and long-term interest rates.