U.S. Treasury yields retreated on Monday, the last trading day of the year.
The 10-year Treasury yield fell about 8 basis points to 4.537%, just below last week’s multi-month high. The 2-year Treasury yield was last at 4.25% after falling more than 7 basis points.
The yield and price move in opposite directions, with 1 basis point equal to 0.01%.
Despite Monday’s decline, the 10-year Treasury yield still rose sharply in the fourth quarter, rising from 3.8% in early October. Inflation and employment data have remained firm in recent months, leading investors to lower expectations for rate cuts from the Federal Reserve.
The Federal Reserve said when it met earlier this month that it would likely cut interest rates less deeply. Policymakers will make their first interest rate decision of 2025 at the end of January. Long-term interest rates have risen in recent months despite the Fed’s rate cuts as traders lowered expectations for further central bank action next year.
“We believe the Fed’s rate cut cycle is nearing its end, as we expect only one more rate cut next year. The Fed and the market expect a longer and deeper rate cut cycle, but our forecast is that as the economy develops, the number of rate cuts will always be higher. Less. Brian Rehling, global head of fixed income strategy at Wells Fargo Investment Institute, said in a note to clients on Monday that strong and stubborn inflation persists.
Economic data released on Monday were mixed. Dow Jones data showed that pending home sales rose to the highest level in a year in November, but the Chicago Purchasing Managers’ Index came in at 36.9, below economists’ forecast of 42.2.
Data released last week showed that initial jobless claims for the week ended December 21 fell slightly, less than expected, while continuing claims for the week ended December 14 jumped to the highest level since November 2021 level.
Bond markets will be closed early Tuesday for New Year’s Eve and New Year’s Day and will remain closed Wednesday.
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