10-year Treasury yield continues to fall after Fed's 'great turnaround'

The 10-year Treasury yield fell further on Monday as the last full trading week of 2023 begins.

Traders continue to digest the Federal Reserve’s unexpectedly dovish tone last week. The central bank kept its key interest rate stable and said policymakers planned at least three rate cuts next year – a more aggressive series of cuts than previously suggested.

The yield on the 10-year Treasury note was slightly lower at 3.913%. Last Thursday, the yield fell below 4%, reaching its lowest level since July.

The two-year Treasury yield fell 3 basis points to 4.423%, below the closely watched level of 4.5%.

Yields and prices move in opposite directions. One basis point is equal to 0.01%.

Treasurys

TICKER COMPANY YIELD CHANGE
US1M US 1-month Treasury bonds 5.398% +0.016
US3M 3-month US government bonds 5.455% +0.065
US6M 6-month US government bonds 5.385% +0.047
US1Y US government bonds with a maturity of 1 year 5.018% +0.054
US2Y US Treasury bonds with a 2-year maturity 4.413% -0.042
US10Y 10-year US Treasury bonds 3.902% -0.026
US30Y 30-year US Treasury bonds 4.007% -0.02

Deutsche Bank strategists on Monday called the Fed’s move a “big shift” from the narrative that the Fed is higher for an extended period of time.

“But the big question now is when those rate cuts might happen, and on Friday we got some mild pushback from Fed officials on the market excitement,” it said in an early note.

This comes after New York Fed President John Williams told CNBC’s Steve Liesman on Friday, “We’re not really talking about rate cuts right now.”

See grafic…

10-year yield this week

“Atlanta Fed President Bostic, meanwhile, said, ‘I don’t really feel like this is an imminent thing’ and that they wouldn’t have to cut rates until the third quarter. Therefore, the markets actually lost some momentum on Friday,” the German strategist added.

US stock futures rose on Monday morning.

Housing market index results are scheduled to be released on Monday, and there will be two auctions of U.S. Treasury bonds: one of 13-week notes and another of 26-week notes.


Posted

in

by