28.01.202619:28:55UTC+00US 10-Year Yield Holds Near 5-Month High

The yield on the 10-year US Treasury note maintained its position above the 4.25% threshold on Wednesday, staying close to its five-month peak of 4.3% observed on January 20th. This stability followed the Federal Reserve's decision to keep interest rates unchanged, a move that aligned with market expectations. Notably, two members of the Federal Open Market Committee (FOMC), including Governor Waller—a strong candidate for the Chair position in May—expressed dissent, advocating for a 25 basis points rate cut. The Fed acknowledged potential risks on both sides of its dual mandate without providing a definitive outlook, prompting markets to hold on to anticipations of two rate cuts by the year's end.

Looking forward, there is an expectation of a steeper yield curve in the coming months as the Federal Reserve intends to continue reinvesting maturing securities into shorter-term bills. Long-term yields have faced pressure due to a certain level of aversion to US assets, partly caused by President Trump's recent tariff threats and Japan's pledges for tax reductions, which collectively spurred a selloff in Japanese Government Bonds (JGBs).