10-year Treasury yields dip as stronger GDP data clouds rate path
U.S. Treasury yields edged slightly lower on Wednesday as investors positioned for a shortened trading day ahead of the holidays.
The 10-year Treasury yield — the benchmark for U.S. government borrowing — was 1 basis point lower at 4.159% by 4:15 a.m. E.T.
Yields on the 2-year Treasury note were largely unchanged, at 3.528%. The 30-year bond yield, meanwhile, showed little movement, holding firm at 4.824%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
As investors digested delayed Commerce Department data that showed the U.S. economy grew by 4.3% in the third quarter — its fastest pace in two years — the stronger-than-expected number potentially complicates the Federal Reserve’s path on interest rates.
National Economic Council Director Kevin Hassett — one of the leading contenders to succeed Jerome Powell as Fed chair next year — told CNBC that the Fed remains “way behind the curve” on rate cuts compared with other countries’ central banks, and is not lowering rates quickly enough.
His comments contrast with those of Cleveland Fed president Beth Hammack, who this past weekend said rates should be held at their current level for several months, as she believes inflation concerns still outweigh labor market weakness.
According to the CME FedWatch Tool, a majority of investors now expect rates to remain on hold until April, at which point the Fed will resume reductions.
Bond markets will close early at 2:00 p.m. on Wednesday and will be closed Thursday for Christmas Day.
