FX.co ★ US 10-Year Yield Hovers at Over 2-Month Low

The yield on the 10-year US Treasury note held below the 4.05% mark on Tuesday, its lowest level in more than two months, amid an uncertain outlook for risk assets and firming expectations that the Federal Reserve will implement multiple rate cuts this year. The latest inflation figures showed headline price growth coming in slightly below forecasts, clearing the way for the US central bank to resume loosening monetary policy in the second half of the year.

Bond demand was further supported by selling pressure in higher-valuation segments of the equity market, as uncertainty over the impact of AI-driven disruption on the US economy prompted investors to shift toward more speculative positions. At the same time, markets remained cautious about potential changes to the Fed’s balance sheet ahead of Kevin Warsh’s assumption of the Chairmanship in May. Warsh has previously argued against large-scale asset purchases, but has recently indicated a willingness to coordinate with the Treasury on measures aimed at easing yields.