FX.co ★ Treasury Yields Rise Slightly

The yield on the US 10-year Treasury note climbed to 4.26% on Friday after declining for five consecutive sessions. This change reflects increasing speculation among traders that the Federal Reserve may opt to reduce interest rates sooner than anticipated. Recent data from the Personal Consumption Expenditures (PCE) index indicated that inflationary pressures remain subdued. Additionally, consumer spending experienced its largest decline since the beginning of the year in May. Yesterday's reports included a surprising 0.5% contraction in the first quarter GDP and a notable increase in continuing jobless claims, reaching their highest point since 2021, further reinforcing these expectations. During recent congressional testimony, Federal Reserve Chair Jerome Powell adopted a particularly dovish stance. He hinted that, without inflationary pressures caused by tariffs, the Federal Reserve would have likely maintained its rate-cutting path. Moreover, there are indications that President Trump could reveal his choice for the next Federal Reserve Chair by September or October, potentially introducing an alternative leadership structure with a more dovish orientation for monetary policy.