U.S. stock indexes are set for a lower open on Tuesday and European equities have been under pressure after German new orders in manufacturing declined -7.4 percent to 2009 recession levels in January while the yield on the 10 yr. U.S Treasury continues to climb ahead of the U.S. Federal Reserve’s March meeting where Fed Committee members are expected to raise the target rate with the federal funds.
The yield on the U.S. 10 yr Treasury reached above 2.5 percent today as the odds of a rate hike at the Fed’s 2 day meeting next week grow stronger after several Federal Reserve Committee members hinted in speeches last week that an upcoming rate hike is appropriate.
Based on CME’s Fed Watcher took, the current probability of a .25 percent basis point rate hike with the U.S. federal funds at the Federal Reserve’s next policy meeting on March 15th has risen to 88.6 percent.
Following the decision from the U.S. Federal Reserve to raise their target rate with the federal funds to .50 to .75 percent on December 14th, the price of the 10 yr. Treasury declined as the yield soared to over 2.6 percent the next day in trading on December 15th before settling lower.
Investors are watching the outcome of an ECB meeting in Frankfurt Germany on Thursday and the results of February’s U.S. non-farm payroll report for further signs about the economy.
Economists from briefing.com have a consensus estimate of 188,000 with U.S. non-farm payroll jobs in February after increasing by 227,000 in January.
Trade Balance and Consumer Credit for January are reported today in the U.S. and tomorrow private payroll processor ADP releases their February jobs report.
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