Updated December 26th, 2023 at 20:44 IST
US Treasury yields experience slight dip as final week of 2023 commences
The decline in longer-dated Treasury bonds follows last week's economic data indicating a softening in inflation.
The benchmark US 10-year Treasury yields began the last week of 2023 with a slight dip, down 0.2 basis points to 3.906 per cent. Similarly, the yield on the 30-year Treasury bond decreased by 0.9 basis points to 4.051 per cent. The market movement during this period is traditionally subdued as many traders take a break for the holidays, and US markets closed on Monday due to Christmas.
The decline in longer-dated Treasury bonds follows last week's economic data indicating a softening in inflation. As markets anticipate potential interest rate cuts by the US Federal Reserve as early as March next year, traders are pricing in up to 152 basis points in rate cuts by the end of 2024, according to FEDWATCH.
Encouraging signs were noted in the new home price data released on Tuesday. S&P CoreLogic Case-Shiller's national home price index revealed a 4.8 per cent increase in home prices in October compared to the previous year, marking the largest annual gain in 2023.
The two-year US Treasury yield, often aligned with interest rate expectations, saw an increase of 3.3 basis points, reaching 4.373 per cent. Meanwhile, a crucial part of the US Treasury yield curve, measuring the gap between yields on two- and 10-year Treasury notes and considered an indicator of economic expectations, stood at -47.3 basis points.
On the agenda for Tuesday, the US Treasury Department is set to conduct several auctions, including $57 billion in two-year notes. The market's reaction to these auctions will be closely observed as the year draws to a close, offering insights into investor sentiment and expectations for the economic landscape in the coming months.
(With Reuters inputs.)
Published December 26th, 2023 at 20:44 IST