U.S. Treasury yields finished mixed in choppy trading on Wednesday as traders weighed a batch of economic data for signals on the path of the Federal Reserve’s interest-rate policy and the economy ahead of the Thanksgiving holiday.
What happened
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
added 2.7 basis points to 4.908%. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
slipped less than 1 basis point to end at 4.415%. The yield on the benchmark for U.S. borrowing costs was down for five consecutive trading days. It was the longest streak of falling yields since April 5, according to Dow Jones Market Data. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
fell 3.2 basis points to end at 4.547%. It was the largest one-day yield decline since November 16, according to Dow Jones Market Data.
What drove markets
Longer-dated U.S. government bond yields initially ticked up on Wednesday morning after the University of Michigan’s consumer-sentiment survey showed Americans’ inflation expectations rose for a second straight month in November as consumers appear worried that the stubborn inflation might be far from defeated.
Longer-term yields later edged lower though on Wednesday afternoon, settling at their lowest levels in two months, according to Dow Jones Market Data.
Consumer sentiment still improved slightly near the end of November, the University of Michigan said on Wednesday. The final reading of the sentiment survey edged up to 61.3 from 60.4 earlier this month.
The consumer-sentiment survey reveals how consumers feel about their own finances as well as the broader economy.
“Despite the upward revision in November, sentiment has still fallen for the last four months,” wrote Jeffrey Roach, chief economist at LPL Financial, in emailed commentary on Wednesday. “The trajectory is clearly downward and implies consumers will be less willing to spend relative to previous months.”
Meanwhile, financial markets will probably not like the upward revision to the 12-month inflation expectations at 4.5%, he added.
See: Consumer sentiment improves, but Americans still worried about inflation
The 10-year Treasury yield has fallen nearly 46 basis points so far in November to trade at two-month lows around 4.4% this week amid hopes that easing inflation means the Federal Reserve has finished hiking interest rates.
Markets were pricing in a 95.2% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next two meetings on Dec. 13 and Jan. 31, according to the CME FedWatch tool.
Meanwhile, the chance of a 25-basis-point rate cut at the subsequent meeting in March was priced at 27.4%, unchanged from the previous session.
The U.S. bond market will be closed on Thursday for the Thanksgiving holiday, and will shut early on Friday.
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