FX.co ★ 10-Year Treasury Yield Hovers Near 1-Year Lows

On Thursday, the yield on the US 10-year Treasury note dipped below 4%, undoing an earlier, brief increase and moving closer to a one-year low. This shift occurred as investors re-evaluated concerns about economic weakness and the outlook for monetary policy. The Philadelphia Fed Manufacturing Index plummeted by 36 points to –12.8, falling significantly short of expectations. This decline highlighted weakening activity and raised worries about overall economic growth, subsequently driving up demand for longer-term Treasuries. Additionally, the ongoing US government shutdown has postponed the release of key economic data, like the September Consumer Price Index (CPI), which further obscures the Federal Reserve's policy direction. Futures markets now largely anticipate 25-basis-point rate cuts at both the October and December meetings, underlining expectations that the central bank will continue easing in response to decreasing economic activity. Comments from Federal Reserve officials, combined with the likelihood of reduced quantitative tightening, have further exerted pressure on long-term yields.