The yield on the US 10-year Treasury note climbed towards 4.2%, marking its highest point since early September. This increase occurred as investors evaluated recent statements from Federal Reserve officials and re-evaluated the monetary policy outlook for 2026. These discussions followed the Fed's decision earlier this week to implement a third consecutive quarter-point rate cut, adjusting the federal funds rate to a range of 3.50% to 3.75%. Despite this, the Fed maintained its projection of only one additional rate cut in 2026.
Kansas City Fed President Jeffrey Schmid, who opposed the rate cut, stated that inflation remains "too hot" and advocated for maintaining a somewhat restrictive policy stance. Similarly, Chicago Fed President Austan Goolsbee voted against the cut, expressing the need for more inflation data, although he anticipates more rate cuts in 2026 compared to his colleagues. In contrast, Philadelphia Fed President Anna Paulson expressed slightly more concern about labor market weakness than rising inflation. Notably, she will become a voting member next year, while Goolsbee and Schmid will rotate out of their voting positions.
