10-Year US Treasury Yield Steady Ahead of Fed Appearance
The yield on the 10-year US Treasury note steadied around 3.88% on Tuesday as investors avoided making big bets ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday.
Traders also awaited the latest FOMC minutes due on Wednesday for more clarity on the monetary policy path. The central bank is widely expected to start cutting interest rates in September, but the market remains divided on whether the Fed would deliver a 25 or 50 basis point reduction.
Still, markets are forecasting nearly 100 bps in total easing this year. Meanwhile, Minneapolis Fed President Neel Kashkari said on Monday that it was appropriate to consider cutting rates in September due to rising labor market risks.
The UK 10-year gilt yield dropped below 3.92%, mirroring the decline in US Treasury yields, as markets awaited Fed Chair Jerome Powell’s speech.
Economic resilience and moderate inflation have led traders to expect fewer rate cuts from the Bank of England than from the Federal Reserve.
Currently, traders anticipate 43 basis points of BoE rate cuts this year, with a 37% chance of a 25-bps cut in September. For the Fed, a 25-bps cut in September is fully priced in, with a 24.5% chance of a 50-bps cut and over 90 bps of easing expected by year-end. #10-Year US Treasury Yield Steady Ahead of Fed Appearance
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