U.S. Treasury yields: investors consider economic outlook

U.S. Treasury yields were higher on Thursday as investors weighed the path ahead for the economy and financial markets as the new year nears.

At 4:07 a.m. ET, the yield on the 10-year Treasury was up by over three basis points to 3.8202%. The 2-year Treasury yield was last more than two basis points higher to 4.2664%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

The Federal Reserve’s monetary policy decisions are front of mind for investors as 2024 approaches.

Following its last meeting earlier this month, the Fed noted that it expects to cut interest rates three times next year and inflation to ease further. Recent economic data has prompted optimism amongst investors about the likelihood of the Fed’s expectations for 2024 becoming reality.

But questions remain about when these rate cuts will come and whether they will be enough to avoid a recession in the U.S. as interest rates will remain elevated even after the cuts.

According to CME Group’s FedWatch tool, markets expect the first rate cut at the Fed’s March meeting, which will be the central bank’s second meeting of the year.

On the data front, weekly initial jobless claims and pending home sales figures are due Thursday. Meanwhile, global stock markets continued their year-end rally, closing in on fresh record highs.