10.12.202509:11:23UTC+00US Treasury Yields at 3-Month High

On Wednesday, the yield on the US 10-year Treasury note approached 4.2%, marking its highest point in three months, as markets anticipated the Federal Open Market Committee's (FOMC) forthcoming policy decision. Although it is generally expected that the Federal Reserve will implement a third consecutive 25 basis point rate cut, much focus is on the updated projections and guidance for 2026. Traders have grown less certain about the continuation of the easing cycle into 2026, due to the persistence of high inflation and ongoing divisions among policymakers. Headline Personal Consumption Expenditures (PCE) inflation climbed to 2.8% in September, which is nearly one percentage point higher than the target. In their September predictions, the Fed projected only a single rate cut for 2026, while current market expectations are pricing in approximately two cuts next year. Adding to the uncertainties are concerns regarding the autonomy of the upcoming Federal Reserve Chair, set to succeed Jerome Powell in May, which have also impacted the bond market. Simultaneously, the yield on the 30-year Treasury rose above 4.8%, reaching its highest level since the beginning of September.