US yields dip after data, Fed comments
10-year Treasury yields declined on Tuesday, near two-month lows after data on the housing market and consumer, along with comments from Federal Reserve officials.
The S&P CoreLogic Case-Shiller national home price index posted a 3.9% increase in September on an annual basis, below the 4.0% estimate but stronger than the 2.5% rise in August, suggesting the housing market may be picking up steam.
A separate report from the Conference Board showed its consumer confidence index climbed to 101.0 in November, below the expected 102.0 but above the downwardly revised 99.1 in the prior month.
Despite a climb last week, the 10-year yield is on track for its biggest monthly decline since August 2019, as investors largely believe the Federal Reserve is done with its interest rate hike cycle and attempts to price in when the central bank will instead cut rates.
The sharp drop has pushed the 10-year yield near its lowest levels since late September.
«The market does a good job of getting itself excited for rate cuts and then overly pessimistic on rate cuts and then overly pessimistic on more hikes and we kind of swing the pendulum from one extreme to the other,» said Thomas Urano, co-chief investment officer at Sage Advisory in Austin.
«We're at the bottom end of this recent range trade and I think the market is has gotten a little bit ahead of itself in expecting the Fed to cut so aggressively absent a sudden downward change in the economic data.»
Softening economic data, including a reading on inflation two weeks ago, has fueled expectations the Fed will hold rates at their current level, while pricing in a slightly greater than 50% chance of a rate cut of at least 25 basis points in May, according to CME's FedWatch Tool.
