Treasuries Rise as U.S. Economic Contraction Clouds Fed Outlook

Treasuries rose, pushing the 10-year note yield to a three-week low, as revised data showed that the U.S. economy shrank in the first quarter, signaling that the Federal Reserve’s path to higher interest rates is uneven.

While there were renewed signals from the central bank that it plans to raise interest rates this year, traders aren’t predicting more than one increase anytime soon and a Morgan Stanley index suggests policy makers won’t act until December. Treasuries have expanded their yield premium to German government securities, adding to the allure for overseas investors.