Market Watch: Treasury Yields Dip as Year-End Trading Begins
As the final trading days of the year get underway, U.S. Treasury yields have taken a slight dip. The 10-year Treasury yield has fallen by approximately 6 basis points to 4.557%, while the 2-year Treasury yield has decreased by a similar margin to 4.269%. This movement is a result of investors shifting their focus to the end of the year and quarter, as well as the outlook for the U.S. economy and monetary policy in 2025.
Economic Outlook and Monetary Policy
The Federal Reserve has indicated that fewer interest rate cuts are on the horizon, with policymakers set to make their first rate decision of 2025 in late January. As the year comes to a close, investors are keeping a close eye on the remaining data points on the calendar, including November’s pending home sales data, the Chicago purchasing managers’ index, and the Dallas Fed’s manufacturing index.
Recent Economic Data
Last week’s data releases showed a mixed picture of the economy. Weekly initial jobless claims for the week ending Dec. 21 fell slightly and came in below expectations, while continuing claims for the week ending Dec. 14 jumped to the highest level since November 2021. These numbers provide some insight into the state of the economy as the year draws to a close.
Holiday Trading Schedule
Bond markets will operate on a reduced schedule this week, closing early on Tuesday and remaining closed on Wednesday for New Year’s Eve and New Year’s Day.
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