US Treasury Yields Fall Post-Christmas

After the Christmas break, the US 10-year Treasury note yield fell to 3.88%. This is close to its lowest point since late July. The drop is due to hopes for more extensive, earlier interest rate cuts next year. These hopes come from new US inflation data showing a slowdown. The latest figures show the US PCE price index fell by 0.1% in November.

This is its first fall since February 2022. It’s different from what the markets expected. There’s a 75% chance the Fed will cut rates by 25 basis points in March. The CME FedWatch tool also suggests over 150 basis points in cuts for the following year.

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Ethan O. Miller

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