• Tue. Dec 5th, 2023

Investors Evaluate Economic Prospects as U.S. Treasury Yields Fluctuate


Nov 20, 2023

On Monday, U.S. Treasury yields saw a slight increase as investors weighed the possibility of an end to the Federal Reserve’s interest-rate hiking cycle. At 3:31 a.m. ET, the 10-year Treasury yield was over three basis points higher at 4.4764%, up from the 4.379% low it briefly touched on Friday. The 2-year Treasury yield rose by less than one basis point to 4.9151%.

Investors have been considering the economic outlook and the monetary policy of the Federal Reserve, with hopes growing that the central bank is done hiking rates. Last week, both the producer and consumer price index came in lower than expected, suggesting that inflation is easing and the Fed’s interest rate hikes are having their desired effect of cooling the economy. With the Fed due to meet in December, expectations are for interest rates to remain unchanged, but investors are also pondering when the Fed will begin cutting rates, something that Fed officials have not addressed in detail yet.

This month, the Fed’s minutes from its last meeting will be released and could provide more insight into its considerations and expectations. Bond markets will have a shortened week as they will remain closed on Thanksgiving Day and close early on Friday for Christmas Eve celebrations.

It’s important to note that yields and prices move in opposite directions, and a basis point is equivalent to 0.01%. While yields may seem like small changes, they can significantly affect bond prices and impact broader financial markets.

Overall, investors continue to monitor economic data closely as they try to predict how much longer interest rates will stay high or when they may begin falling again.

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