FX.co ★ Treasury Yields Stabilize

On Wednesday, the yield on the US 10-year Treasury note steadied at approximately 4.45%, following three days of declines. Market participants are anticipating new developments as they closely observe trade tensions and fiscal policies under the Trump administration, particularly the proposed tax legislation expected to increase the budget deficit by almost $3 trillion over the coming decade. Additional focus is on the outcomes of a $70 billion auction for new five-year notes and the upcoming release of the Federal Open Market Committee (FOMC) minutes, which may provide further insights into the Federal Reserve's policy direction. Currently, investors predict two interest rate cuts of 25 basis points each later this year, likely in September and December. Moreover, recent downward pressure on US Treasury yields has been attributed to reports that Japanese authorities might intervene to stabilize their bond market. This could include reducing the issuance of super long-term bonds, following a sharp sell-off that resulted in record-high yields.