FX.co ★ US 10-Year Yields Holds Decline

The yield on the US 10-year Treasury note held below 5.1% on Friday, stabilizing after a sharp decline in the previous session, as a global equity selloff boosted safe-haven demand for government bonds. Investors are increasingly pricing in the risk of a slowdown in the artificial intelligence–driven capital expenditure boom, which has been a key support for the US economy and financial markets. At the same time, market participants continued to assess the Federal Reserve’s policy outlook, with stronger-than-expected US economic data reinforcing expectations of further interest rate increases. Futures markets currently imply about a 72% probability that the Fed will keep rates unchanged this month, while the implied likelihood of a December rate hike has risen to 92%. Cleveland Fed President Beth Hammack warned that the central bank may need to tighten policy more aggressively if public inflation expectations were to deteriorate materially.