The yield on the US 10-year Treasury note hovered around 5% on Thursday as investors continued to evaluate the monetary policy stance and economic outlook. As widely anticipated, the Federal Reserve left interest rates unchanged on Wednesday and gave no clear indication of a rate hike in December, with Chair Warsh emphasizing that policymakers are not following a predetermined path. Still, the Fed acknowledged that inflation remains elevated, and two officials dissented in favor of raising rates.
Fresh data showed that PCE inflation accelerated in September in line with expectations, with the annual core rate rising to 3.1%, well above the Fed’s 2% target. At the same time, US GDP expanded at an annualized 3.4% in the third quarter, beating forecasts, driven by AI-related investment and solid consumer spending. Initial jobless claims also remained below 200K, underscoring labor market resilience. In this context, futures markets now imply nearly an 83% probability of a 25 bps Fed rate hike in December.
