US Treasury yields were slightly lower on Friday as markets reopened for a shortened trading day following the Thanksgiving holiday.
The yield on the 10-year Treasury bond decreased by 2 basis points, reaching 4.22%, while the 2-year Treasury yield remained steady at 4.208%.
In the Treasury market, yields and prices move in opposite directions, meaning that the dip in yields reflects a rise in prices. The movements come amid a quiet trading session, with few economic data points being released on Friday after a busy week leading up to the holiday.
Earlier in the week, key economic indicators, including the Federal Reserve’s preferred inflation measure, showed a slight uptick to 2.3%, which was in line with expectations. Initial claims for unemployment benefits also dropped more than anticipated, indicating continued strength in the labor market. However, the Federal Reserve’s minutes from its November meeting suggested that if inflation and labor market data continue to hold steady, a gradual reduction in interest rates might be considered.
Markets are currently pricing in a 66.3% chance that the Fed will cut rates by 25 basis points at its December meeting. However, recent remarks from President-elect Donald Trump, who has threatened to impose new tariffs on China, Mexico, and Canada, have raised concerns that these actions could increase domestic inflation. This may lead the Federal Reserve to take a more cautious approach to easing monetary policy than previously expected.
Despite the quieter trading environment, investors are closely monitoring upcoming data on consumer behavior, particularly Black Friday spending. Any signs of strong consumer sentiment could influence market expectations for the Fed’s next moves, potentially impacting the chances of a rate cut in December.
As of the latest data, the yield on the 2-year Treasury dropped 2 basis points to 4.217%, while the 30-year Treasury yield slipped 3.1 basis points to 4.402%. The overall market sentiment reflects continued optimism about the resilience of the US economy, despite the ongoing concerns about inflation and global trade tensions.
With input from CNBC and Market Watch.
