U.S. Treasuries continue to decline, with the yield on the benchmark 10-Year bond falling to a two-month low of 4.369%.
Treasury yields have been declining for several weeks as investors bet that the U.S. Federal Reserve is now done raising interest rates.
The 10-year Treasury yield is at its lowest level since Sept. 20. At the end of October, the yield on the 10-year note was above 5%. Yields and prices move in opposite directions.
Bond markets are digesting the release of the Federal Reserve’s latest meeting minutes, which did not suggest that interest rate cuts will be happening anytime soon.
The meeting minutes also noted that inflation still remains above the Fed’s annualized 2% target and needs to be brought lower through restrictive monetary policy.
However, futures markets are now pricing in expectations that interest rates in the U.S. have peaked and that the Fed will begin lowering rates by the second quarter of 2024.
The latest inflation data showed that consumer prices in the U.S. rose 3.2% year-over-year in October, down from a peak increase of 9.1% in June 2022.
The continued decline of inflation has investors betting that the Fed is done hiking rates, with markets now focused on when interest rates will start coming down.
U.S. markets are closed on Nov. 23 for America’s annual Thanksgiving holiday.
