07.11.202515:38:13UTC+00US 10-Year Yield Holds Pullback

The yield on the 10-year Treasury note decreased to 4.1%, down from a recent one-month peak of 4.16%, amidst growing indications of a slowing economy that bolstered predictions of an interest rate reduction by the Federal Reserve next month. Notably, the Michigan consumer sentiment index unexpectedly dropped to its second-lowest point on record for November. Furthermore, the Challenger report highlighted a significant increase in job cuts during October, with companies attributing the reductions to subdued consumer demand and corporate cost-cutting strategies. These survey results grew in significance as the ongoing government shutdown has delayed the release of official economic data. Despite this, persistent inflation and strong economic performance have led 30% of the market to still anticipate that the Fed may hold rates steady next month. Additionally, the ISM Services PMI exceeded expectations in October, with its price index reaching a three-year high. In response, the Treasury indicated it will maintain a focus on increasing issuance volumes in bills rather than coupon securities, as the Federal Reserve becomes a net purchaser of short-term securities to counterbalance the mortgage-backed securities (MBS) run-off.