U.S. Treasury yields were steady on Monday as expectations continued to rise on expectations of a rate cut at the Federal Reserve’s meeting on Wednesday.
As of 2:39 a.m. in New York, the 10-year US Treasury yield was unchanged at 4.141%, and the 30-year US Treasury yield was little changed at 4.794%. The yield on two-year U.S. Treasuries was little changed at 3.561%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Markets expect the Fed to cut key interest rates at its final meeting of the year, with traders pricing in about an 87% probability that the Fed will cut rates by 25 basis points at the end of the two-day meeting, according to the CME FedWatch tool.
Investors had priced in a nearly 67% chance of a rate cut a month ago, according to the CME FedWatch tool.
On Friday, Morgan Stanley withdrew its call for a quarter-point cut in December, with strategists saying, “We appear to have jumped the gun.” JPMorgan and Bank of America also expect rate cuts based on recent dovish behavior from Fed officials.
This follows last week’s data release from payroll processor ADP, which reported an alarming decline in private payrolls, and the Labor Department’s announcement that unemployment claims for the week ending November 29 fell to the lowest level since September 2022.
Elsewhere, Treasury Secretary Scott Bessent said Sunday the holiday season was “very strong,” suggesting the U.S. economy will end the year on a strong footing.
“The economy is doing better than we expected, with gross domestic product growth of 4% in the last few quarters,” he said in an interview on CBS News’ “Face the Nation.” “Despite Schumer’s closure, we still intend to finish the year with real GDP growth of 3%.”
Across the Atlantic, the European Central Bank will also be closely monitoring the Fed’s decision as it holds its final policy meetings this week and next. The Swiss National Bank will issue its latest policy update on Thursday, while the Bank of England and the European Central Bank are due to make interest rate decisions on December 18th.
Meanwhile, the Bank of Japan is also scheduled to hold its last policy meeting for 2025 on December 19th.
—CNBC’s Ryan Ermey and Holly Ellyatt contributed to this report.
