U.S. long-term bond yields briefly reached their highest level in seven months due to expectations of a slower pace of interest rate cuts by the U.S. central bank, the Federal Reserve (Fed).
According to the U.S. Treasury, the yield on the 10-year U.S. Treasury note was 4.595% at 3:33 p.m. Eastern Time on the 23rd (local time), up 7.6 basis points (1bp=0.01 percentage points) compared to the close of the New York stock market the previous day. It even reached 4.602% at one point. This is the first time it has exceeded 4.6% since May 30.
The yield on the 10-year U.S. Treasury note has been on a continuous upward trend since the 9th. Bloomberg noted that investors expect the Fed to slow the pace of rate cuts and are also highly concerned about the potential deterioration of the U.S. fiscal situation under the second Trump administration.
Earlier, the Fed presented a revised economic outlook last week, setting the year-end target interest rate (median) at 3.9%, 0.5 percentage points higher than the September forecast of 3.4%. It anticipated only two rate cuts next year. Until September, Fed officials had expected four rate cuts next year.
The spread between the 10-year and 2-year U.S. Treasury yields nearly converged to '0' earlier this month but widened to 24 basis points at one point on this day. Chris Arens, strategist at Stifel Nicolaus & Co., analyzed, "This signals that due to fiscal concerns and overall policy uncertainty, investors are demanding a higher term premium on long-term government bonds."
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