With the crisis in Ukraine escalating, US Treasury yields were able to grind marginally lower last week, despite improving economic data pointing to gradually improving fundamentals. At a yield of 2.67%, 10 year Treasury rates have been confined to a 25 basis point trading range over the last 12 weeks (2.57%- 2.82%), which according to Bloomberg, is the narrowest such range in the last two decades. However, broader interest rate trends could soon reemerge despite this recent complacency, as the spring suggests stronger economic data following an exceptionally poor winter—breaking Treasury yields from its unsustainable, narrow range.
This week offers a great deal of new information, all of which has the ability to drive market volatility and shape interest rate direction for the next several weeks. The key data releases include: Q1 GDP, ADP jobs report, the FOMC on Wednesday, consumer confidence, and the employment report on Friday. With yields at their lowest levels since last June, the payrolls report will command the most attention. Expectations are that +215k jobs were created in April, with the unemployment rate inching lower to +6.6%.