FX.co ★ Treasury Yields Edge Lower, FOMC Eyed

The yield on the US 10-year Treasury decreased below 4.05% as the week began, reaching levels seen last in April. This decline occurs as traders anticipate the Federal Reserve's upcoming policy decision. The market has fully factored in a 25 basis point reduction in the federal funds rate expected on Wednesday, while also considering a slight possibility of a more significant 50 basis point cut. This speculation follows recently released data indicating a notable slowdown in the labor market. Investors will be keenly attentive to the Fed's revised macroeconomic forecasts, especially the outlook on interest rates, with a general expectation that rate reductions will persist through the end of the year. The manner in which the votes are split will also be of interest, as the Federal Open Market Committee has not seen a three-way division since 2019. Additionally, traders are keeping an eye on the confirmation of Stephen Miran as a Fed governor, as it is uncertain whether this will occur before the meeting.