FX.co ★ Treasury Yields Edge Down, Fed Eyed

The yield on the US 10-year Treasury note declined further, dropping below 4.4% on Wednesday, following an almost 7 basis-point decrease in the prior session. This movement reflects traders' strategic positioning ahead of the Federal Reserve’s upcoming policy decision. The central bank is anticipated to maintain the current federal funds rate, as it seeks clearer insights into the economic ramifications of President Trump’s administration policies. Market participants will closely scrutinize the Fed’s revised economic forecasts, focusing on projections for inflation, unemployment, and future interest rate trajectories. Currently, traders are factoring in the likelihood of nearly two quarter-point interest rate cuts by the year's end, with full anticipation of the initial reduction occurring in October. In recent economic data, initial jobless claims were reported at 245,000, staying close to an eight-month peak, while housing starts and building permits saw unexpected declines, highlighting ongoing challenges within the housing sector.