The yield on the 10-year U.S. Treasury note shifted lower on Tuesday. This comes after the rate hit its highest level in more than two months on Monday, crossing 4%. The yield was less than a basis point lower at 4.018%.
The yield slipped 4 basis points to 3.964%. Yields move in the opposite direction of prices. One basis point equals 0.01%.
The 10-year Treasury yield started the week by jumping to 4%. This happened despite the Federal Reserve starting a rate-cutting campaign last month. It also occurred amid strong labor market readings.
Fed Governor Adriana Kugler said on Tuesday that she “strongly supported” the central bank’s 50 basis point move in September. She also said that she is watching how upcoming tropical storms and geopolitical tensions could impact future cuts. Investors have some jitters about how fast the Fed will cut rates in the future.
They are also dealing with rising geopolitical tensions in the Middle East.
Treasury yields slip amid uncertainty
Uncertainty about China’s stimulus plans is another factor.
The rise in the 10-year yield last week came after a stronger-than-expected jobs report. This led investors to adjust their expectations for how much the Fed will cut rates this year. Since the jobs report, traders have increased their bets that the Fed will lower rates by a quarter point in November and December.
The CME FedWatch Tool shows this. Higher rates for a longer time are likely to strain both companies and everyday Americans. The 10-year yield influences the rates on many types of loans.
These include mortgages, student loans, and car loans. So, consumers looking to borrow for big purchases will face higher costs. Data coming out this week could give clues about where the Fed will take rates this year.
Investors will closely examine the Consumer Price Index report for September. They will also look at wholesale inflation figures. Inflation has cooled enough that the Fed is now focused on maximizing employment.
However, a jobs report that is still hot could make it harder to get inflation down to the Fed’s 2% target.
