Economic Forecasts Uncertain as US Treasury Yields Volatile

On Monday, the yields of US Treasury bonds experienced a slight increase, as investors evaluated the economic outlook and considered the likelihood that the Federal Reserve’s interest-rate hiking cycle has come to an end. At 3:31 a.m. ET, the yield on the 10-year Treasury was over three basis points higher, standing at 4.4764%. Just two days earlier, it had briefly reached a low not seen since September at 4.379%. The yield on the 2-year Treasury also rose by less than one basis point, reaching 4.9151%.

It is important to note that yields and prices move in opposite directions and that one basis point is equivalent to 0.01%. Investors are considering various factors such as the economy and Federal Reserve monetary policy when evaluating bond yields. Recent readings for both the producer and consumer price index have suggested that inflation is easing, which may be contributing to this shift in sentiment among investors. With this in mind, there is growing hope that the central bank may finish with interest rate hikes following these lower-than-expected readings. However, it remains unclear whether this means that interest rates will remain unchanged at the Fed’s last meeting in December or if there will be further cuts down the line.

Investors are closely watching for any signs of potential rate cuts from the Fed, though officials have not addressed this issue in detail yet. Data from the Fed’s last meeting is set to be released on Tuesday and could provide insight into their considerations and expectations moving forward. No key data is expected on Monday; however, markets will be closed on Thursday for Thanksgiving Day and will close early on Friday due to holiday celebrations.