The 10-year Treasury yield fell slightly on Tuesday, marking its first decline in October. The yield dipped to 4.01%, down just one basis point from the previous day, after a volatile start to the month.
- The 10-year note had surged nearly 30 basis points in just over a week, following September’s market response to the Federal Reserve’s decision to cut the federal funds rate by 50 basis points.
14-Month Low: Last month, the 10-year yield fell to a 14-month low of 3.62% during intraday trading, only for it to rally swiftly in response to the Fed announcing a 50 basis point cut to the Federal Funds Rate followed by economic data suggesting that the labor market remains stronger than anticipated.
- This data has driven speculation about the Fed’s next move in November, with traders now leaning toward more modest action. According to the CME FedWatch tool, 85% of traders expect a 25 basis point cut at the next meeting, while 15% have priced in the possibility of no cut at all.
Looking Ahead: The bond market’s recent rally has calmed in anticipation of Wednesday’s release of the Federal Open Market Committee (FOMC) meeting minutes and Thursday’s Consumer Price Index (CPI) report, both of which are critical for determining future rate moves. If inflation data comes in hotter than expected, analysts warn that the bond selloff could resume, driving yields back up.
Bottom Line: The markets remain on edge as investors await these key reports, which could shift expectations for November’s Fed decision and influence the future trajectory of Treasury yields.
