Treasuries Rally as Weak Data Reinforce Fed Wagers: Markets Wrap

Treasuries rallied after weaker-than-expected economic data reinforced speculation that the Federal Reserve will cut interest rates at least twice this year to prevent an economic recession.

A contraction in US service providers and a deceleration in hiring drove bond yields down across the curve. Swap traders are pricing in two Fed reductions in October and December. The possibility of a move in September increased to over 90%. The dollar slipped. The S&P 500 was little changed, with defensive industries like health care and communications outperforming the market.