The yield on the benchmark U.S. 10-year Treasury bond has dropped below 4% to its lowest level since July of this year.
Treasury yields in the U.S. have been falling sharply since Dec. 13 when the U.S. Federal Reserve signalled that interest rates have likely peaked and also forecast as many as three rate cuts in 2024.
The yield on the 10-year Treasury is now at 3.90% to start the final full trading week of 2023. The two-year Treasury yield has declined to 4.42%, falling below the key threshold of 4.50%.
Yields and prices move in opposite directions. The steady decline in Treasury yields is helping equities to rally as we close out the year, say analysts.
The U.S. central bank’s pivot from its previous stance of higher-for-longer interest rates has traders and investors feeling bullish about equities heading into the New Year.
However, it’s not clear exactly when the Fed will make its first interest rate cut. In an interview with CNBC on Dec. 15, New York Fed President John Williams said: “We aren’t really talking about rate cuts right now.”
