FX.co ★ 10-Year Yield Holds Rebound

The yield on the US 10-year Treasury note stood at 4.14% on Tuesday, maintaining the gains achieved last week as financial markets evaluated the outlook for interest rates and the anticipated future supply of Treasury securities. Yields on long-term securities have continued their upward trajectory following a series of strong economic indicators and hawkish statements from Federal Reserve Chairman Powell after the central bank's latest policy decision. Retail sales in August significantly exceeded expectations, and industrial production saw an unexpected rise. Moreover, the S&P PMI indicated ongoing expansion in economic activity, although companies surveyed reported heightened inflationary pressures. These figures correspond with Chairman Powell's comments that September's rate reduction marked the beginning of a rate-cutting cycle, resulting in increased yields across all maturities as Federal Open Market Committee (FOMC) members forecast higher core inflation and GDP growth. Nonetheless, Chairman Powell also emphasized in a Rhode Island speech that the Fed's risk assessment is increasingly shifting to focus on a potential weakening of the labor market.