Treasury yields slide after Williams suggests Fed could cut again
Treasury yields fell on Friday after New York Federal Reserve President John Williams offered investors some hope that the Fed could cut interest rates next month at its last meeting in 2025.
Benchmark return 10 year Treasury It fell more than 4 basis points to trade at 4.059%. Yields have fallen across the maturity curve 2 year Treasury yield fell more than 5 basis points to 3.501% and over the longer term 30 years of TreasuryIts yield fell more than 2 basis points to 4.706%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Speaking in Santiago, Chile, Williams said he thought the Fed could cut interest rates again, adding that its “modestly restrictive” monetary policy had become “a little less so” since the central bank approved the cuts at its October and September meetings.
“I still see room for further near-term adjustments to the target range of the federal funds rate to move the policy stance closer to the neutral range and thus maintain the balance between achieving our two goals,” he said during a speech in Santiago, Chile.
CME’s Fed fund futures investors increased their bets for a rate cut in December following Williams’ statements and priced it at a probability of over 70%, according to CME’s forecasts. FedWatch showed the vehicle.
Expectations had fallen significantly in recent weeks. The day before Williams’ comments, money markets were pricing in a below 40% chance of a rate cut next month.
The data had fallen early Friday following a sell-off in U.S. stocks on Thursday; The move was triggered by growing pessimism about the interest rate outlook and concerns about valuation levels in AI trading.
Global markets are also digesting Thursday’s delayed nonfarm payrolls report, which showed the economy added more jobs than expected in September but the unemployment rate also rose to 4.4%, its highest level since October 2021.
