Following Monday’s downturn, the treasury market continued its decline on Tuesday. Bond prices declined slightly at the start of the session and remained in negative territory throughout. As a result, the yield on the benchmark ten-year note, which inversely correlates with its price, increased by 2.2 basis points, reaching 4.221 percent.
This rise marks a recovery in the ten-year yield, which had concluded last Friday at its lowest closing level in over a month. The persistent downturn in treasuries can be attributed to trader caution in anticipation of the Labor Department's crucial consumer price inflation report due on Wednesday.
Forecasts suggest that consumer prices will show a 0.2 percent rise for the fifth consecutive month in November. The annual growth rate for consumer prices is anticipated to rise slightly to 2.7 percent in November, up from 2.6 percent in October. Core consumer prices, excluding volatile food and energy sectors, are expected to climb by 0.3 percent for the fourth consecutive month in November, with the annual core inflation rate remaining steady at 3.3 percent.
While it is broadly anticipated that the Federal Reserve will reduce interest rates by another 25 basis points next week, this data could influence the outlook on future rate cuts by the central bank. Currently, the CME Group's FedWatch Tool shows an 86.1 percent probability of a quarter-point rate cut by the Fed next week, with a 69.1 percent likelihood that rates will remain unchanged in late January.
