10-Year Treasury Yields Rise as Rate Cut Expectations Diminish
The 10-year Treasury yield climbed to 4.095% on Friday, reflecting dwindling expectations for a Federal Reserve rate cut. CME's FedWatch tool now shows a 62.9% probability of a cut, down sharply from 91.7% just a week ago. This shift follows the Fed's recent 25 basis point reduction on October 29, accompanied by Chair Jerome Powell's cautious remarks that further cuts aren't guaranteed and will depend on labor market and inflation trends.
Two Fed officials have publicly opposed additional easing. Dallas Fed President Lorie Logan cited balanced labor conditions and persistent inflation risks, while Kansas City's Jeff Schmid warned of potential inflationary resurgence. Schmid, the sole dissenter in October's FOMC vote, argued that even a modest cut could have prolonged inflationary effects without meaningfully impacting employment.
