Investors weighing the economic outlook and the possibility of an end to the Federal Reserve’s rate hike cycle caused U.S. Treasury yields to rise slightly on Monday. At 3:31 a.m. ET, the 10-year Treasury yield was over three basis points higher at 4.4764%, from a low of 4.379% briefly touched on Friday. The two-year Treasury yield rose less than one basis point to 4.9151%.
Investors have been weighing the economic outlook and the Federal Reserve’s monetary policy, with hopes growing that the central bank will raise rates. Last week, both the producer and consumer price index fell lower than expected, suggesting that inflation is easing and that the Fed’s interest rate hike is having the desired effect of cooling the economy. With the Fed due to meet in December, expectations are that interest rates will remain unchanged. Investors are also thinking about when the Fed will start cutting rates, which Fed officials did not address in detail. However, many are hopeful that this could change based on recent economic data.
It is important to note that yields and prices move in opposite directions and that a basis point is equivalent to 0.01%. As investors continue to monitor economic developments and await further guidance from the Fed, bond markets will have a shortened week as they remain closed on Thursday for Thanksgiving and close early on Friday