FX.co ★ US 10-Year Yield Holds at 3-Week High

On Monday, the yield on the US 10-year Treasury note dipped to 4.1%, still hovering near its three-week high as investors sifted through the limited data available for insights into the Federal Reserve's future rate decisions. In October, the ISM Manufacturing PMI indicated a sharper contraction than anticipated for US goods producers. Furthermore, both employment and price indicators fell below market expectations, resonating with the views of the more dovish Federal Open Market Committee (FOMC) members, who are increasingly showing signs of differing opinions. Last week, the Federal Reserve cut interest rates by 25 basis points, a move that was widely anticipated. However, Chairman Powell tempered expectations of another rate cut next month, resulting in a broad selloff in Treasuries across various maturities. This reaction occurred even after the Fed announced the cessation of its balance sheet reduction. Consequently, the Fed will become a net purchaser of short-term securities, with Treasury bills used to offset maturing mortgage-backed securities (MBSs), aiming to alleviate recent pressures in the overnight funding markets.