FX.co ★ US 10-Year Yield Eases Toward 5-Month Low

The yield on the 10-year US Treasury note remained below 4.05% as of Tuesday, hovering near its lowest point in five months. This movement comes as markets closely evaluate the Federal Reserve's impending rate decision. Recent payroll reports have highlighted a weakening labor market, prompting Federal Open Market Committee (FOMC) members to potentially consider a 25 basis point rate cut. Additionally, the upcoming Summary of Economic Projections should provide insights into how the FOMC intends to weigh the risks of persistent inflation against the challenge of rising unemployment. Current market sentiment anticipates a total of three rate cuts within the year. Despite signs of labor market softening, consumer spending metrics stay strong, with retail sales up by 0.6% in August. The control group index, which significantly impacts US GDP calculations, rose by 0.7%, marking the fourth consecutive month of growth. Nonetheless, enduring high inflation has tempered expectations for significant rate cuts next year. The Consumer Price Index (CPI) recently increased at a faster rate, and August saw an unexpected rise in import prices, hinting at a potential inflationary effect stemming from tariffs.