US Treasury yields were slightly lower on Monday as the final trading days of the year began.
Shortly after 11 a.m. ET, the yield on 10-year treasury it fell about 6 basis points to 4.557%, trading slightly lower multi-month highs recorded last week. The 2-year treasury the yield last traded at 4.26% after falling more than 6 basis points.
Yields and prices move in opposite directions, and one basis point is 0.01%.
Investors focused on the end of the year and the quarter and considered the outlook for the US economy and the future path of the Federal Reserve’s monetary policy in 2025.
The Fed has indicated that less interest rate cuts were on the horizon when he met earlier this month. Policymakers will make their first decision on rates in 2025 at the end of January. Long-term interest rates have risen in recent months, despite the Fed’s cuts, as traders discount expectations of further central bank measures next year.
“We believe the Fed’s rate-cutting cycle is coming to an end, as we expect only one additional rate cut next year. Fed and market expectations were for a longer and deeper rate-cutting cycle, but our projections have consistently shown fewer rate cuts as economic strength and stubborn inflation has held,” Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute, said in a note to clients on Monday.
Economic data released on Monday was mixed. Pending home sales data for November rose to the highest level in a year, but the purchasing managers’ index in Chicago came in at 36.9, below the 42.2 forecast by economists, according to Dow Jones.
Data released last week showed that weekly initial jobless claims for the week ended December 21 fell slightly and came in below expectations, while permanent claims for the week ended December 14 jumped to the highest level since November 2021.
Bond markets will close early on Tuesday and remain closed on Wednesday as it is New Year’s Eve and New Year’s Day.
