US 10-Year Yield Eases Amid Fed Uncertainty

The yield on the US 10-year Treasury note hovered around 5% on Thursday, as investors continued to assess the monetary policy and economic outlook. The Fed left interest rates unchanged on Wednesday, as expected, and offered no clear signal of a rate hike in December, with Chair Warsh stressing that policymakers were not on a predetermined path. However, the central bank acknowledged that inflation remains elevated, while two policymakers dissented in favor of a rate hike. Meanwhile, fresh economic data showed that PCE inflation accelerated in September, as expected, with the annual core rate reaching 3.1%, remaining well above the Fed’s 2% target. Meanwhile, US GDP grew at a stronger-than-expected annualized rate of 3.4% in Q3, supported by AI-related investment and robust consumer spending. Initial jobless claims also came in below 200K. Against this backdrop, traders are pricing in nearly an 83% probability of a 25bps rate hike by the Fed in December.

The US 10-year Treasury yield slipped slightly below 5% on Thursday, resuming its decline after the Federal Reserve left interest rates unchanged as widely expected but offered limited guidance on its next policy move. Fed Chair Kevin Warsh also suggested that the central bank could reduce the number of interest-rate decisions from eight to six per year, potentially adding to market uncertainty. Meanwhile, two policymakers dissented in favor of a 25-basis-point rate hike, reinforcing expectations for a possible increase in December amid persistent energy-driven inflation. Investors are now awaiting the US PCE price index, the Fed’s preferred inflation gauge, for further clues on the future direction of monetary policy. Market attention is also focused on upcoming policy announcements from the European Central Bank and the Bank of Japan, with both institutions widely expected to keep interest rates unchanged.

The US 10-year Treasury note yield remained above 5% after the Federal Reserve kept interest rates unchanged, while subtle adjustments to its policy statement were viewed as signaling a slightly more dovish stance. The FOMC voted 10–2 to maintain the federal funds rate within the 3.75%–4% range, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a 25-basis-point increase. However, officials offered little guidance on a potential December hike, emphasizing that future decisions would depend on incoming data and progress toward the 2% inflation target. Fed Chair Kevin Warsh also announced plans to maintain eight annual FOMC meetings while reducing the number of rate decisions to seven in 2027 and six in 2028. The announcement comes less than a week before the November midterm elections, amid widespread public dissatisfaction with the economy. Polling indicates a competitive political landscape, with Democrats holding an advantage in several key races.