FX.co ★ US 10-Year Yield Inches Upward

On Thursday, the yield on the 10-year US Treasury note reached 4.08%, recovering from the previous day's decline as investors continued to assess the Federal Reserve's interest rate projections for the upcoming year. A series of labor market data reinforced expectations for a 25 basis point rate reduction by the Fed next week. This expectation was led by an unexpected decrease in payrolls reported by the ADP and a 25% year-on-year increase in job cuts as shown in the Challenger report. Nonetheless, there were still apprehensions that persistent inflation might hinder the Fed from implementing several rate cuts next year. Concerns emerged from the Treasury's feedback that market participants were wary of the new Fed Chair potentially implementing excessive rate cuts to appease President Trump. Additionally, the start of December marked the completion of the Fed's quantitative tightening program. However, primary dealers anticipate that the Fed might escalate short-term bill purchases to prevent liquidity issues in the funding markets.