US Treasury yields on 10-year bonds increased by three basis points to 4.33% as investors eye the impact of Donald Trump’s presidential policies. Treasury markets were closed Monday, but early trading saw yields inch up on Tuesday as markets reopened.
Analysts at LPL Financial suggest that strong economic data, potential tax cuts, and tariffs could elevate yields further, especially if the Fed maintains a dovish stance. Meanwhile, Minneapolis Fed President Neel Kashkari noted that, while the economy is resilient, inflation still presents challenges.
Investors are also bracing for October inflation data, due Wednesday, which could influence Fed moves. Current market bets indicate 60% odds of a December rate cut, with options trading indicating possible cuts at both December and January meetings.
Strategists from Citi, JPMorgan, and Morgan Stanley remain cautious, maintaining a neutral stance on bond duration amid the uncertainty. In Europe, German bonds performed well, reflecting expectations of a more conservative European Central Bank terminal rate.
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