The yield on US Treasury bonds has mostly increased, while market participants continued to digest the results of the Federal Reserve's meeting, which signaled a slower cycle of monetary policy easing next year.
The yield on 5-year Treasury bonds increased by 0.6 basis points, reaching 4.389%, while the yield on 30-year bonds was 4.699% (+3.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 3.9 basis points to 4.316%, while the yield on 10-year bonds increased to 4.522% (+2.4 basis points).
Yesterday, the Fed, as expected, lowered the interest rate by 0.25%. However, Fed Chairman Jerome Powell spoke in a "hawkish" tone regarding the prospects for next year, raising the inflation forecast and pointing to only two possible rate cuts, compared with four that were expected in September. According to the CME FedWatch Tool, markets see an 8.6% probability of a 0.25% rate cut in January (compared to 20.8% a week ago).
Market participants are now preparing for the release of data on labor and housing markets, as well as final U.S. gross domestic product (GDP) data for the quarter. Economists expect GDP growth to slow to 2.8% q/q from 3% q/q in the 2nd quarter, while initial jobless claims fell to 229 thousand from 242 thousand a week earlier.