• Thu. Nov 30th, 2023

Investor Analysis: Treasury Yields and the Economic Forecast in the US


Nov 20, 2023

On Monday, yields of US Treasury bonds saw a slight increase as investors weighed the economic outlook and the possibility of an end to the Federal Reserve’s interest-rate hiking cycle. The 10-year Treasury yield rose by over three basis points to 4.4764%, up from the 4.379% low it briefly touched on Friday. Similarly, the 2-year Treasury yield increased by less than one basis point to 4.9151%.

The move in yields and prices is in opposite directions, with a basis point equivalent to 0.01%. Investors have been considering various factors, including the economic outlook and monetary policy of the Federal Reserve. There has been growing hope that the central bank is done hiking rates after both the producer and consumer price index came in lower than expected last week, indicating that inflation is easing and the Fed’s interest rate hikes are having their desired effect of cooling down the economy. With the Fed meeting in December ahead, expectations are for interest rates to remain unchanged. Additionally, investors are pondering when the Fed will begin cutting rates, something that Fed officials have not addressed in detail yet. However, there is hope that this may change based on recent economic data.

This month, bond markets will have a shortened week as they will remain closed on Thanksgiving Day and close early on Friday. Moreover, investors eagerly await the release of minutes from the Fed’s last meeting later this month for more insight into its considerations and expectations regarding interest rates and monetary policy.

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