US Treasury Yields Rise Amid Speculation of Slower Rate Cuts Under Trump. Traders are betting on less than two-quarter point cuts next year, sparking concerns over interest rate outlook under President-elect Donald Trump’s administration. Long-term yields rose on Monday, adding to the yield-curve steepening momentum as traders see a slower pace of interest rate reductions by the Federal Reserve in 2024.
Traders’ increased skepticism about the Fed’s ability to keep rates low for an extended period has led to a rise in longer-term Treasury yields. The gap between 10-year and two-year yields is now at around 25 basis points, up from nearly zero earlier this month. This is part of a trend known as the “inverted yield curve,” where shorter-term yields exceed those of longer-term notes.
The increase was fueled by US central bank officials’ latest quarterly projections, dubbed the dot plot, which showed that they plan to halve their estimates for interest rate reductions next year. The forecasts also pointed to higher long-run rates, seen as a proxy for the Fed’s neutral policy level.
“This is a normalization of the yield curve,” said Andrew Brenner, head of international fixed income at NatAlliance Securities. “The fiscal situation and outlook for more supply are factors behind the rise in long-end risk premium.”
Source: https://finance.yahoo.com/news/us-treasury-yields-edge-higher-184606358.html