Posted 12/27/2023, 11:14:00 AM
Treasury Yields Drop as Traders Bet on Moderating Inflation and Future Fed Rate Cuts
- 10-year Treasury yield drops to 3.8% as investors bet on easing inflation and future Fed rate cuts
- 2-year, 10-year, and 30-year Treasury yields all fell significantly (11 bps, 9.9 bps, and 8.5 bps respectively)
- Drop extended after $58B 5-year Treasury note auction with improving bid-to-cover ratio
- Markets pricing in 85.5% chance Fed keeps rates unchanged in Jan, but 84.6% chance of a 25 bp cut by March
- Traders expect Fed policy rate to drop to 3.75-4.0% range by December 2024