US Treasury bond yields are showing negative dynamics as market participants react to the news that Donald Trump has chosen his future Treasury Secretary - fund manager Scott Bessent, who is an old Wall Street hand and a fiscal conservative. Experts believe that Bessent will support Trump's economic goals, including gradual tariff increases and business support policies. However, Bessent is likely to prioritize stability in the U.S. economy and markets. Overall, his appointment was positively received by markets concerned about the size of the US budget deficit and the inflationary impact of tariffs.
The yield on 5-year Treasury bonds fell by 4.6 basis points, reaching 4.252%, while the yield on 30-year bonds was 4.519% (-7.6 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 2.4 basis points to 4.345%, while the yield on 10-year bonds fell to 4.341% (-6.9 basis points).
Market participants are also preparing for the publication of new US data that will help clarify the state of the economy and may affect the trajectory of the Fed's monetary policy. Minutes of the Fed's last meeting, which will be presented tomorrow, will offer more color on the decision to cut by 0.5% and the discussion for future easing. Meanwhile, the GDP report for the 3rd quarter, as well as the personal consumption expenditure price index (the Fed's preferred inflation indicator) for October, will further refine the outlook for rates. According to the CME FedWatch Tool, markets see a 56.2% probability of a 0.25% rate cut in December (compared to 58.7% a week ago).
It is also worth noting that the US markets are closed on Thursday for Thanksgiving and end early on Friday.