2-year Treasury yield at lowest since September 2022 as Fed rate cut looms
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U.S. Treasurys rallied Monday morning, pushing the 2-year Treasury yield further into its lowest since September 2022, as market-implied odds shifted in favor of a 50-basis-point interest-rate cut by the Federal Reserve this week.
What’s happening
- The yield on the 2-year Treasury BX:TMUBMUSD02Y fell by 1.6 basis points to 3.559%, from Friday’s closing level of 3.575% or its lowest since Sept. 12, 2022.
- The yield on the 10-year Treasury BX:TMUBMUSD10Y dipped less than 1 basis point to 3.646%, from 3.648% on Friday.
- The yield on the 30-year Treasury BX:TMUBMUSD30Y also retreated less than 1 basis point to 3.973%, from 3.976% on Friday.
What’s driving markets
The central bank is fully expected to cut interest rates this week, after holding them at a 23-year high of 5.25% to 5.5% for more than a year.
As of Friday morning, fed-funds futures traders shifted to a 65% likelihood that a 50-basis-point rate cut will be delivered by the Fed on Wednesday. Only a 35% chance was seen of a smaller, 25-basis-point rate cut, according to the CME FedWatch Tool.
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