FX.co ★ Treasury Yields Retreat After Early-Week Rise

The yield on the US 10-year Treasury note dropped below 4.1% on Friday, reversing the gains seen earlier in the week. This movement comes amid the federal government shutdown, now in its tenth day, which has further delayed crucial economic data releases. Currently, market attention is focused on the upcoming preliminary release of the Michigan consumer sentiment index expected later today. In parallel, traders are digesting recent statements from Federal Reserve officials, notably Governor Waller, who indicated that private data suggests the labor market remains weak. This supports the argument for further interest rate cuts, although he stressed the need for the Fed to proceed with caution. His comments are consistent with the sentiment expressed in the FOMC minutes released this past Wednesday. Investors are now largely factoring in a 25-basis-point rate cut for later this month, and the probability of a similar action in December stands at approximately 83%.