US Treasury Yields Fluctuate in Narrow Range—Muted Trading Ahead of Thanksgiving

(New York=Yonhap Infomax) Jeong Ho Jin—US Treasury prices traded in a narrow range, holding steady as market activity slowed ahead of the Thanksgiving holiday.

With expectations for a possible rate cut in December gradually resurfacing, trading volumes have thinned as the holiday approaches.

According to Yonhap Infomax’s intraday overseas rates screen (screen number 6532), as of 08:44 AM US Eastern Time on the 24th, the yield on the 10-year Treasury note stood at 4.055%, down 0.80 basis points from the previous session’s 3:00 PM close.

The yield on the policy-sensitive 2-year note rose 1.00 basis point to 3.524% over the same period. The 30-year Treasury yield fell 2.30 basis points to 4.692%.

The yield spread between the 10-year and 2-year notes narrowed to 53.1 basis points from 54.9 basis points the previous day. Treasury yields and prices move inversely.

Bond market trading hours are shortened this week for Thanksgiving. The New York bond market will be closed on the 27th for Thanksgiving and will close early at 14:00 on the 28th.

Many market participants have already left for the holiday, and trading typically remains subdued during major US holidays such as Thanksgiving.

After a volatile week, financial markets have paused to reassess direction. Hopes for a December rate cut have gained traction, bolstered by comments from Federal Reserve Governor Christopher Waller.

In an interview with Fox Business, Waller suggested that with a softening labor market, inflation is not a major concern, indicating support for a rate cut in December. Waller had previously backed a 25 basis point cut at the October Federal Open Market Committee (FOMC) meeting.

According to the CME FedWatch Tool, the federal funds futures market is pricing in a 76.7% probability of a 25 basis point rate cut in December, up from 71% at the end of last week.

However, despite dovish remarks from New York Fed President John Williams last week and Waller’s latest comments, caution remains as markets are not fully convinced of a December rate cut.

Neil Dutta, economist at Renaissance Macro, noted, “Within the Fed, the proportion of doves supporting a December rate cut and hawks favoring a hold is nearly even,” highlighting the uncertainty over a rate cut decision.

No major economic indicators are scheduled for release today. Instead, the bond market will focus on upcoming data, including the ADP weekly private employment estimate (four-week moving average), September retail sales and producer price index (PPI), and the Conference Board’s November consumer confidence index, all due on the 25th.

jhjin@yna.co.kr

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