The 10-year Treasury yield climbed above 4.2% on Tuesday. This followed comments from Federal Reserve officials. The officials urged caution on the path of interest rate cuts.
The yield on the 10-year Treasury rose by 2 basis points to 4.2036%. This marked its first time above 4.2% in three months. On Monday, the yield had jumped by 12 basis points.
The 2-year Treasury yield also increased. It rose by 2 basis points to 4.0431%. Yields and prices move in opposite directions.
One basis point equates to 0.01%.
Treasury yield climbs after Fed comments
Despite a quiet week on the data front, comments from Fed policymakers have captured traders’ attention.
Minneapolis Fed President Neel Kashkari mentioned on Monday that the longer-term trajectory for interest rates could be higher than previously anticipated. Dallas Federal Reserve President Lorie Logan emphasized a patient approach to lowering rates. Kansas City Fed President Jeff Schmid echoed this sentiment.
He suggested a “cautious and deliberate” approach to future rate cuts was appropriate. This commentary follows the Federal Reserve’s decision to cut rates by half a percentage point in September. Rates have risen since that rate cut.
This is influenced by strong economic data and uncertainty surrounding the Fed’s future actions. According to the CME’s FedWatch tool, traders currently see an 87.5% chance of a quarter-point rate cut at the Fed’s next meeting ending November 7. The majority expect another cut at the December meeting.
Philadelphia Fed President Patrick Harker is also scheduled to speak on Tuesday.
