Reserve

2024

Yield

Rise

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<p class="has-drop-cap">The yield on 10-year US Treasuries has pushed above the 4% level again on Thursday after <a aria-label="recent comments (opens in a new tab)" href="https://www.reuters.com/markets/us/feds-waller-says-us-within-striking-distance-inflation-goal-2024-01-16/" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">recent comments</a> by a Federal Reserve official – who urged the central bank not to cut interest rates unless it’s evident lower inflation will be sustained – and stronger-than-expected <a aria-label="retail sales growth in December (opens in a new tab)" href="https://www.reuters.com/markets/us/us-retail-sales-beat-expectations-december-2024-01-17/" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">retail sales growth in December</a>.&nbsp;</p>
<h3 id="fed-governor-warns-against-premature-rate-cuts-retail-sales-rise-more-than-expected">Fed Governor Warns Against Premature Rate Cuts; Retail Sales Rise More Than Expected</h3>
<p>The US 10-year Treasury yield again rose above the 4% mark on Thursday, its second time this week.&nbsp;</p>
<p>The gains came following a Fed official’s comments suggesting early interest rate cuts are less likely. Notably, the central bank’s governor Cristopher Waller said on Tuesday that the Federal Reserve is “within striking distance” of the 2% inflation goal, however, the officials should not rush to reduce benchmark interest rates until clear signs of moderating inflation emerge.&nbsp;</p>
<p>Waller emphasized that irrespective of the timing of rate cuts, the central bank should adopt a methodical and cautious approach. He suggested steering clear of substantial, rapid reductions typically employed by the Fed during attempts to rescue the economy from sudden shocks or impending downturns.</p>
<p>Meanwhile, newly released data showed that US retail rose faster than expected in December, underscoring the economy’s resilience going into the new year. The report led to economists upgrading their growth estimates for Q4, but also further reduced market expectations that the Fed would begin cutting interest rates in March, as many initially expected. Furthermore, there is a growing skepticism about whether the Fed will successfully orchestrate the much-discussed <a href="https://tokenist.com/three-indicators-that-show-promise-for-a-soft-landing/" rel="noopener noreferrer nofollow" class="deco-link">soft landing</a>.</p>
<p>Retail sales increased by 0.6% last month, following an unrevised 0.3% gain in November, according to the Commerce Department’s Census Bureau. Economists surveyed by Reuters had predicted a 0.4% growth in retail sales.</p>
<p>Following the report and Waller’s comments, the odds for a 0.25% interest rate cut at the Fed’s policy meeting in March <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank" aria-label=" (opens in a new tab)" rel="noopener noreferrer nofollow" class="deco-link">fell to 55.7%</a>.</p>
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<h3 id="10-year-yield-hits-1-month-high">10-Year Yield Hits 1-Month High</h3>
<p>At the time of writing, the yield on the 10-year Treasury was 4.12%, the highest mark in over a month.&nbsp;</p>
<p>The yield has been on a downtrend in recent weeks since the Federal Reserve <a href="https://tokenist.com/spx-spikes-1-4-as-fed-pivot-sparks-market-optimism/" rel="noopener noreferrer nofollow" class="deco-link">confirmed</a> it plans to begin cutting interest rates in 2024 in December, propelling the S&amp;P 500 to <a href="https://www.forbes.com/sites/dereksaul/2023/12/19/sp-500-inches-within-06-of-all-time-high-as-fed-left-confused-by-recent-stock-surge/" target="_blank" aria-label="near all-time highs (opens in a new tab)" rel="noopener noreferrer nofollow" class="deco-link">near all-time highs</a>.&nbsp;</p>
<p>However, recent macro headwinds, including mixed data from Fed minutes and an <a href="https://tokenist.com/december-cpi-shows-3-4-annual-increase-in-prices-above-expectations/" rel="noopener noreferrer nofollow" class="deco-link">unexpected uptick</a> in the December consumer price index (CPI), brought uncertainty.&nbsp;</p>
<p>The 10-year Treasury yield is closely monitored by analysts, investors, and economists as it serves as a key barometer for assessing the economy’s health. Fluctuations in the yield offer insights into investor sentiment, inflation expectations, and overall economic conditions.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe>
<p><strong><em>Recent weeks have revealed numerous signs of persisting macro headwinds, which will likely delay the first rate cut. Will this limit the equities’ upside in the coming months? Let us know in the comments below.&nbsp;</em></strong></p>
<p><em>Disclaimer: The author does not hold or have a position in any securities discussed in the article.</em></p>
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/10-year-treasury-yield-holds-above-4-1-as-early-rate-cuts-seem-unlikely/">10-year Treasury Yield Holds Above 4.1% as Early Rate Cuts Seem Unlikely</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

10-year Treasury Yield Holds Above 4.1% as Early Rate Cuts Seem Unlikely

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