FX.co ★ Treasury Yields Little Changed

The yield on the US 10-year Treasury rose slightly on Thursday, reaching 4.01%. This marked its first increase in three sessions, though the yield remained near the lows observed in April. Investors are currently in a holding pattern, seeking new catalysts while keeping an eye on US–China trade tensions and the persistent federal government shutdown, which has delayed the release of crucial economic data. Additionally, the Philadelphia Fed Manufacturing Index experienced an unexpected drop, hitting its lowest point in six months. On the monetary policy front, market participants are pricing in a 96% likelihood of a 25 basis point rate cut by the Federal Reserve at the month's end, with the probability of another similar cut in December rising to 91%. Federal Reserve Governor Christopher Waller suggested that policymakers might continue reducing rates incrementally, by a quarter-point, to bolster a weakening labor market, while Stephen Miran reiterated his advocacy for a more substantial reduction. Earlier in the week, Fed Chair Jerome Powell highlighted growing risks to employment, hinting further at the likelihood of continued reductions in borrowing costs by the central bank.