On Monday, U.S. Treasury yields experienced a slight increase as investors took into account the economic outlook and evaluated the likelihood that the Federal Reserve’s interest-rate hiking cycle has come to an end. The yield on the 10-year Treasury rose by more than three basis points, standing at 4.4764%. Just two days earlier, it had briefly reached a low not seen since September at 4.379%. The 2-year Treasury yield 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 factors such as the economy and Federal Reserve monetary policy, with growing hopes that the central bank is finished with interest rate hikes following lower-than-expected readings for both the producer and consumer price index. These lower readings suggest that inflation is easing and the Fed’s interest rate hikes are effectively cooling the economy. There is widespread expectation among markets that interest rates will remain unchanged at the Fed’s last meeting in December. Investors are pondering when the Fed might begin to cut rates, though Fed officials have not addressed this in detail. Data from the Fed’s last meeting will be released on Tuesday and could provide insight into the central bank’s considerations and expectations. No key data is expected on Monday. Lastly, it is worth noting that the bond markets will be closed on Thursday and will close early on Friday for Thanksgiving.