FX.co ★ Treasury Yields Move Lower

The yield on the US 10-year Treasury note declined to 4.06% on Friday, reaching its lowest level since late October. This movement occurred as market participants increased their expectations for a Federal Reserve rate cut next month, spurred by comments from the President of the New York Federal Reserve, John Williams. Williams indicated that he still perceives "room for further adjustment in the near term to the target range for the federal funds rate," which would bring monetary policy closer to a neutral stance. Additionally, Governor Miran noted that recent data suggests a shift towards a more dovish approach. Conversely, Dallas Fed President Logan expressed caution, stating she would find it challenging to support another rate cut in December unless there is clear evidence of a more rapid decrease in inflation than anticipated or a quicker cooling of the labor market. The likelihood of a December rate cut has significantly increased to approximately 71%, rising sharply from below 30% earlier in the week. The 10-year yield is poised for its most substantial weekly decline since the week ending October 10.