Traders work on the floor of the New York Stock Exchange during the opening bell on Nov. 13, 2024.
The 10-year U.S. Treasury yield advanced on Tuesday as investors analyzed latest Federal Reserve meeting minutes and key economic data due this week.
The yield on the 10-year Treasury rose more than 3 basis points to 4.296%, regaining some ground after tumbling in Monday's session. The 2-year Treasury yield was near flat at 4.254%.
Yields and prices moved inversely to one another, and one basis point equals 0.01%.
The Fed minutes said future interest rate cuts were likely, but to expect them to come "gradually." The minutes were tied to the Federal Reserve's last policy meeting earlier this month, when it lowered its benchmark lending rate a quarter point to a range of 4.50% to 4.75%.
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"In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes stated.
The central bank started cutting the fed funds rate in September, and the next meeting of the rate-setting Open Market Committee comes on Dec. 17-18.
Current expectations are for no more than a coin flip at the Fed's last meeting of the year, based on the CME Group's FedWatch Tool, which extrapolates what the market is forecasting based based on 30-day interest rate futures prices. Traders are pricing in about an approximately 60% chance the Fed shaves rates another quarter point next month, and 40% odds rates will stay unchanged.
Money Report
The minutes come one day ahead of key inflation data, when the personal consumption expenditures price index for October is released Wednesday. The PCE is the Fed's favored inflation gauge and inform its monetary policy decisions.
On Tuesday, October new home sales came in far below Wall Street expectations. On the other hand, November consumer confidence was a touch weaker than estimated and the Richmond Fed's manufacturing index missed economists' estimates.
Investors also continued to assess President-elect Donald Trump's choice of hedge fund executive Scott Bessent as Treasury secretary. The pick soothed investor nervousness and reassured capital markets that economic policy will stay in competent hands, with Bessent expected to prioritize economic and market stability over ideology.
