FX.co ★ US 10-Year Yield Holds Rebound

The yield on the 10-year US Treasury note rose to 4.18% on Friday, continuing its recovery from last week's five-month low of 4%. This uptick was prompted by robust economic data, which diminished the urgency for additional rate cuts by the Federal Reserve. Notably, the US GDP was revised upward, durable goods orders showed an unexpected increase, and initial unemployment claims dropped to a two-month low. These indicators eased worries about a rapid decline in the labor market, which had previously led some FOMC members to advocate for further rate cuts. Meanwhile, rate futures indicate that while the majority of investors expect the Fed to implement a 25 basis point rate cut next month, over a third of the market anticipates rates will remain unchanged in December. This tempered expectation of cuts resulted in yields on shorter-term notes rising faster than those on longer-term bonds, thereby narrowing the yield curve steepening observed earlier this quarter. Investors are now looking forward to personal income and expenditure data and are evaluating the potential risks of a federal government shutdown amid ongoing congressional stalemates.