FX.co ★ US 10-Year Yield Falls Further

The yield on the 10-year US Treasury note decreased to 4.0% just before the Thanksgiving holiday, marking its lowest point in nearly a month. This movement mirrors shifts across the yield curve as investors anticipate the Federal Reserve will implement a 25 basis point rate cut in December. Recent, albeit delayed, data from the US revealed that retail sales in September increased less than projected, which poses a risk to consumer strength. Concurrently, weekly employment data from ADP indicated a notable decline. This economic climate follows statements from FOMC Governor Waller and New York Fed President Williams, both expressing support for a rate cut in the Fed's upcoming final decision of the year. The dovish tones have led the rate markets to broadly anticipate a rate reduction by month's end, contrasting with the prior week's expectation of a rate hold. Additionally, yields face further downward pressure as the FDIC plans to relax enhanced SLR regulations, potentially allowing major banks to increase their holdings of Treasuries.