US Treasury yields were mixed in thin trading, with investors pricing in lower interest-rate cuts by the Federal Reserve. The benchmark 10-year yield remained stable at around 4.6%, while two-year rates edged lower. This has led to a widening of the yield premium on longer maturity bonds.
Investors demand higher yield compensation for long-term Treasuries amid signs of sticky inflation and growing concerns over President-elect Donald Trump’s agenda, which could boost the federal budget deficit. A New York Fed measure of term premium rose to its highest level since October 2023.
Swaps traders predict a 0.37 percentage point reduction in Fed rate cuts by year-end, less than the two-quarter-point reductions signaled by officials earlier this month. Two-year Treasury yields declined to 4.32%, with solid demand for short- to medium-term debt.
Source: https://finance.yahoo.com/news/bonds-fall-thin-end-trading-101841047.html