Rates Pause as Bank of England Strikes Cautious Note

Rates take a breather but remain near multiyear highs. It was a less volatile day in interest rate markets, rates and yields pulling back somewhat from yesterday’s multiyear highs. The 2-year would end the day 2.5 bps lower at 1.91% while the 10-year Treasury yield was little changed near 2.17%. Secretary of State Blinken’s pessimism around an imminent diplomatic resolution in Ukraine was at least partly to blame, the official saying that Russia may even be preparing to use chemical weapons in a bid to extend the conflict.

Bank of England votes to raise rates by 0.25% to 0.75%. The BOE is the latest bank to act in the face of high inflation, which is expected to hit 8% across the pond. While the BOE has signaled its commitment to fighting rising prices, it has been more measured around its signaling for future rate hikes than the FOMC. While the Fed indicated it plans to hike rates at every meeting this year, the BOE only said that “further modest tightening in monetary policy” may be needed to control inflation.

Philly Fed’s manufacturing index jumps to a four-month high. The index, which provides a gauge of regional business activity, jumped to 27.4 in March (est. 15.0) from 16 the month prior. Robust demand pushed the new orders index to 25.8 from 14.2, while the employment index hit a new record high of 38.9 from 32.3. Price pressures continue to remain a key concern for businesses, the prices paid index rising to 81.1, the highest reading since 1979.