U.S. 10-Year Treasury Yield Drops to New Low, 2-Year Tries to Follow
The 10-year Treasury yield retreated to its lowest level since October on Friday as the market closed early due to the Thanksgiving holiday. The 10-year yield fell by nearly 5 basis points to reach 4.194%, with a brief dip to 4.184%, its lowest level since October 25. The 2-year Treasury yield also declined by more than 3 basis points and reached 4.176%.
The bond market was quiet on Friday, with no significant economic data released, following a busy week that saw the release of the Federal Reserve’s preferred inflation measure, initial claims for unemployment benefits, and meeting minutes. Despite the positive news, the Fed’s minutes suggested that it may be warranted to “gradually” lower interest rates if price increases and labor data continue to come in as expected.
However, President-elect Donald Trump’s threat to pass tariff hikes on China, Mexico, and Canada could lead to increased domestic inflation and potentially cautious rate cuts from the Fed. Market participants currently price in around 66% odds of a 25 basis-point rate cut in December, according to the CME Group’s FedWatch Tool.
