FX.co ★ US 10-Year Yield Hits 2½-Month Low

The yield on the US 10-year Treasury note fell toward 4% on Tuesday, touching its lowest level since early December after last week’s soft inflation data reinforced expectations of Federal Reserve interest rate cuts. Markets are now focused on a potential move in June, pricing in about 62 basis points of easing for the year—equivalent to two quarter-point cuts and roughly a 50% chance of a third. Still, stronger-than-expected payroll gains—the largest increase in more than a year—and an unexpected drop in the unemployment rate signaled ongoing resilience in the labor market. Investors are now awaiting the minutes from the Fed’s most recent meeting, advance GDP figures, and the core PCE price index, the central bank’s preferred inflation measure, for additional policy clues. US bond markets were closed on Monday for the Presidents’ Day holiday.