On Monday, U.S. Treasury yields experienced a slight increase as investors weighed the economic outlook and the possibility of an end to the Federal Reserve’s interest-rate hiking cycle. The 10-year Treasury yield rose by over three basis points to 4.4764%, up from the 4.379% low it briefly touched on Friday. Meanwhile, the 2-year Treasury yield increased by less than one basis point to 4.9151%.
It is important to note that yields and prices move in opposite directions and that a basis point is equivalent to 0.01%. Investors have been closely monitoring the economic outlook and the monetary policy of the Federal Reserve, with hopes growing that the central bank is done raising rates. Last week, both the producer and consumer price index came in lower than expected, suggesting that inflation is easing and that the Fed’s interest rate hikes are having their intended effect of cooling down the economy. With the Fed due to meet in December, expectations are for interest rates to remain unchanged, while investors are also speculating when the Fed will begin cutting rates, something that Fed officials have not addressed in detail yet. However, many are hoping this may change based on recent economic data.
This month, investors will be looking forward to the release of the Fed’s minutes from its last meeting which could provide more insight into its considerations and expectations regarding monetary policy moving forward. Bond markets will have a shortened week as they will be closed on Thanksgiving Day and early close on Friday.