FX.co ★ US Treasury Yields Climb Amid Fed Rate Cut Uncertainty

The yield on the 10-year US Treasury is approaching 4.2%, marking its highest point since early September, as investors remain cautious regarding the Federal Reserve's potential interest rate cuts. Despite the anticipation of a 25 basis point reduction this Wednesday, the 30-year yield has also increased to 4.8%, a three-month high. Current money market probabilities suggest an 86% chance of a 25 basis point cut this week. However, persistent inflation concerns have dampened expectations for an aggressive stance by the Fed. Last week's slight improvement in US consumer confidence has added to the uncertainty, contrasting with labor market reports indicating a significant slowdown in hiring, thus raising questions about the pace of monetary easing anticipated in 2026. Additionally, political developments are influencing market sentiment. President Trump is expected to nominate a Federal Reserve Chair who aligns with his dovish policy approach, yet feedback from the Treasury suggests there is apprehension among market participants that a new Chair may extend rate cuts beyond appropriate levels due to political pressures.