31.10.202514:19:53UTC+00Treasury Yield Rally Pauses

On Friday, the yield on the US 10-year Treasury note stabilized around 4.08%, taking a pause following a three-day rally that elevated the benchmark yield to its highest point in three weeks, bolstered by a more assertive stance from the Federal Reserve. While the Fed implemented a much-expected 25 basis point rate reduction earlier in the week, Chairman Powell underscored that a rate cut in December is not guaranteed. The market's expectations for another cut in December dropped significantly to approximately 63%, a decline from nearly 90% before the meeting. Kansas City Fed President Schmid cited inflation concerns as his reason for opposing this week’s cut in the federal funds rate, aligning with Dallas Fed President Lorie Logan, who also indicated her opposition to the rate reduction. Additionally, the Fed declared that it would conclude its balance sheet runoff at the start of December. The central bank will now maintain all maturing Treasury securities and reinvest mortgage-backed securities into Treasury bills, aiming to alleviate recent pressures in overnight funding markets.