Yields dip with AI growth concerns, Fed in focus

NEW YORK – US Treasury yields edged lower on Monday as traders evaluated whether the Federal Reserve will cut rates next month, with delayed data releases including the closely watched monthly jobs report due this week.

More hawkish commentary from regional Fed officials last week led investors to lower bets on a December rate cut, which fed funds futures traders are now pricing as having only a 39% probability.

Fed Vice Chair Philip Jefferson said on Monday the US central bank needs to “proceed slowly” with any further interest rate cuts as it eases policy toward a level that would likely stop putting downward pressure on inflation.

At the same time, stock and debt investors are focused on how artificial intelligence companies are financing data centers, with concerns growing that these financing structures are less robust than previously thought.

“That’s really influencing what’s going on in the investment-grade credit markets in particular and thereby flowing through back into the broader bond markets,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

“Since AI expansion is such a prominent piece of the current source of economic growth, it’s a material impact. That’s the bear economic case that’s circulating more aggressively right now and helping pull Treasury yields a little bit lower,” he said.

The 2-year note yield, which typically moves in step with Fed rate expectations, was last down 1 basis point at 3.606%. The yield on benchmark US 10-year notes fell 1.7 basis points to 4.131%.

The closely watched yield curve between two- and 10-year notes flattened to 52.3 basis points.

This week’s main US economic focus will be the release on Thursday of the jobs report from September.

JPMorgan expects the report to show that employers added 50,000 jobs during the month, and “while this would be a sequential firming in labor demand, we think it’s enough to support further Fed easing.”

Interest rate strategists led by Phoebe White at the bank say rate cut expectations could maintain lower shorter-dated yields over the coming week. However, it will be more difficult for longer-dated yields to fall.

“We think it’s more challenging for long-end yields to decline significantly from current levels, as valuations and position technicals both should act as a headwind locally,” they said.

Meanwhile the delay in the release of economic reports and issues relating to data collection while the federal government was shut down are likely to damage the quality of releases through the rest of the year.

This will make it more difficult to gauge the strength of the economy as concerns grow about a weakening labor market and Fed officials remain worried about sticky inflation.

“There’s going to be a lot of uncertainty that the next time we’ll have a true real-time collection of jobs data will be the report released in the first week of January,” said LeBas.

White House economic adviser Kevin Hassett said on Thursday the government would release the closely watched employment report for October, but without the jobless rate. The government will also not release inflation data for October.

(Reporting by Karen Brettell; Editing by Alexander Smith and Lisa Shumaker)

Wall Street indexes end lower; investors brace for jobs data, Nvidia results

NEW YORK – US stocks ended sharply lower on Monday, with the S&P 500 and the Nasdaq closing below a key technical indicator for the first time since late April as investors braced for quarterly results from retailers and chip giant Nvidia and awaited a long-delayed US jobs report this week.

Losses accelerated in afternoon trading as all three main indexes traded below their 50-day moving averages. This closely followed moving average is seen as a proxy for the intermediate-term trend. The Dow closed below its 50-day moving average for the first time since October 10.

Results this week from major retailers Walmart, Home Depot, and Target will round out the quarterly earnings season. Shares of Home Depot, due to report on Tuesday before the bell, ended 1.2% lower.

Investors eagerly awaited the September jobs report, which is due to be released on Thursday after the long US government shutdown ended last week.

Investors are waiting for two big things: “a look at the consumer … and Nvidia’s earnings,” said Adam Sarhan, chief executive of 50 Park Investments in New York, noting that “you have a consumer that is potentially getting weaker, not stronger.”

Also, he said, the market is consolidating after strong gains this year. The S&P 500 remains up 13.4% for the year to date.

Nvidia, the world’s largest company by market value, which is at the heart of Wall Street’s artificial intelligence trade, is due to report after the bell on Wednesday. Its shares fell 1.9% on Monday and were the biggest drag on the Nasdaq and S&P 500.

Stocks have been pressured this month by concerns that AI exuberance has driven up valuations to expensive levels.

The Dow Jones Industrial Average fell 557.24 points, or 1.18%, to 46,590.24, the S&P 500 lost 61.70 points, or 0.92%, to 6,672.41, and the Nasdaq Composite lost 192.51 points, or 0.84%, to 22,708.08.

It was the first time the S&P 500 and Nasdaq closed below their 50-day moving averages since April 30.

Among the day’s gainers, Google parent Alphabet rose 3.1% after Berkshire Hathaway revealed a stake of USD 4.3 billion in the company.

Berkshire also further reduced its stake in Apple, whose shares ended 1.8% lower on Monday.

Among other declining shares, Dell Technologies dropped 8.4% and Hewlett Packard Enterprise fell 7%, both after Morgan Stanley ratings downgrades.

Investors also digested views on the outlook for stocks next year. Brokerage Morgan Stanley expects US stocks to outperform peers next year and prefers global equities over credit and government bonds.

Declining issues outnumbered advancers by a 4.03-to-1 ratio on the NYSE. There were 90 new highs and 248 new lows on the NYSE.

On the Nasdaq, 1,168 stocks rose and 3,577 fell as declining issues outnumbered advancers by a 3.06-to-1 ratio.

Volume on US exchanges was 19.06 billion shares, compared with the roughly 20 billion average for the full session over the last 20 trading days.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Saumyadeb Chakrabarty and Matthew Lewis)

Gold falls over 1% on firm dollar, reduced rate cut bets

Gold prices fell more than 1% on Monday, pressured by a stronger dollar and reduced expectations of a US interest rate cut next month, as investors awaited delayed economic data this week that could offer clues on the Federal Reserve’s policy path.

Spot gold was down 1.5% at USD 4,019.12 per ounce, as of 03:13 p.m. ET (20:13 GMT). US gold futures for December delivery settled 0.5% lower at USD 4,074.5 per ounce.

The dollar index inched higher, making dollar-priced bullion expensive for holders of other currencies.

The market is seeing “some back and forth choppy action ahead of what is expected to be a release of a deluge of economic data now that the US government has reopened,” said David Meger, director of metals trading at High Ridge Futures.

“Right now, there’s a lesser expectation for additional Fed rate cuts, which has dented optimism for gold.”

This week’s calendar includes September jobs data on Thursday and minutes from the Fed’s last meeting, where it cut rates by 25 basis points, on Wednesday.

Meanwhile, an increasing number of Fed policymakers have maintained a hawkish stance on rate cuts for the central bank’s next meeting in December.

Traders are currently pricing in a 41% probability of a 25-basis-point rate cut in December, down from more than 60% last week, the CME FedWatch tool showed.

Fed Vice Chair Philip Jefferson said the US central bank needs to “proceed slowly” with any further interest rate cuts as it eases policy towards a level that would likely stop putting downward pressure on inflation.

Safe-haven gold tends to thrive in a low-interest-rate environment as it is a non-yielding asset.

Scotiabank analysts estimate gold prices at USD 3,800/oz for 2026, compared with USD 3,450/oz this year, citing uncertain economic conditions and an eventual decline in real interest rates.

Elsewhere, spot silver dropped 1.2% to USD 49.94 per ounce, platinum fell nearly 1% to USD 1,526.45, and palladium dipped 0.4% to USD 1,379.02.

(Reporting by Pablo Sinha in Bengaluru; Additional reporting by Sarah Qureshi; Editing by Shilpi Majumdar)

China’s trade clout can quicken the yuan’s rise

HONG KONG – A single word often makes a big difference in Chinese policy. In previous five-year economic development plans, for example, Beijing had always reiterated it wants to “prudently promote” yuan internationalization. In an outline of the next 2026-2030 blueprint unveiled last month, the word “prudently” has been struck out. That signals bolder designs for the renminbi, though progress will be limited so long as economic planners keep tight control over capital flows.

China’s USD 20 trillion economy may be the second-largest in the world, but its currency was only the fifth most-traded last year, according to a September report from the Bank of International Settlements. Still, thanks to incremental policies, including currency swap deals with other central banks, the yuan now makes up 8.5% of global currency transactions, up from 7% in 2022.

For Beijing, trade settlement will probably be the next area of focus, given China’s 15% share of USD 33 trillion of global trade by value. Notably, as part of a broader contract dispute, China’s steel industry has stopped purchasing dollar-denominated iron ore from Australia’s BHP since October, according to Chinese media, citing sources, and has insisted the mining giant settle 30% of transactions in yuan going forward. Separately, Dutch chipmaker Nexperia’s Chinese unit has demanded all transactions be settled in yuan, Reuters reported, citing sources, after The Hague seized control of the company’s Netherlands-based parent in September, sparking a broader standoff.

These moves can have an immediate impact. Up to 12.4 trillion yuan (USD 1.7 trillion) of trade with China was paid in local currency last year, about 27% of the total, according to the country’s central bank’s yuan internationalization report published last week.

Settling 30% of imports from BHP can add another USD 39 billion worth of yuan-denominated transactions annually. And using renminbi will appeal to countries that want to reduce their reliance on the US dollar. That includes Brazil and Russia, which exported USD 31 billion of soybeans and USD 50 billion of crude oil, respectively, to the People’s Republic last year.

Chinese planners have long insisted that their plan is not to replace the greenback with a “redback”. And it’s unlikely they will allow the country’s currency to flow freely across its borders. Still, Beijing’s trade clout can help it chip away at the dollar’s dominance.

CONTEXT NEWS

Commodity news portal SteelOrbis reported on October 11 that BHP has agreed with China Mineral Resources Group to switch to yuan settlements for 30% of its spot ore trade with China, citing sources.

Separately, Dutch chipmaker Nexperia’s Chinese unit has resumed supplying semiconductors to local distributors, but all sales to distributors must now be settled in yuan, Reuters reported on October 23, citing two people briefed on the matter.

(Editing by Robyn Mak; Production by Ujjaini Dutta)

Dollar steady as investors eye release of US data backlog

SINGAPORE – The dollar firmed slightly on Monday as investors braced for the release of a slew of US economic data following the end of the government’s shutdown, hoping it would add clarity to the Federal Reserve’s rate outlook in December.

Market reaction to US President Donald Trump’s tariffs U-turn on more than 200 food products was muted, with some analysts saying the move was not a surprise due to cost-of- living issues.

Elsewhere, sterling remained under pressure following a whirlwind Friday session as speculation swirled around the UK government’s highly anticipated November 26 budget.

The safe-haven Swiss franc hovered around a one-month high and last stood at 0.7941 per dollar, finding support from jitters over an ugly selloff in stock markets recently.

The focus this week will be on various US data releases for clues on the health of the world’s largest economy, with the closely watched September’s nonfarm payrolls report due on Thursday.

“We have had a data vacuum for over 40 days, so I think markets will be super interested in any new information about the US economy,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).

“I think the risk is definitely skewed to a weaker payrolls print, and that would just reignite market expectations about a December FOMC rate cut and send the US dollar down.”

Currency moves were subdued in early Asia trade on Monday ahead of the releases, with the euro down 0.11% to $1.1607 while the Australian dollar reversed some of its gains from last week and eased 0.15% to USD 0.6527.

The New Zealand dollar similarly fell 0.12% to USD 0.5673, while the US dollar index rose slightly to 99.37.

Despite signs of further weakness in the US economy from recent private-sector data, investors have trimmed expectations of a Fed cut next month, betting that gaps in economic data will delay or even derail further easing.

Markets are now pricing in just over a 40% chance of a 25-basis-point rate cut next month, down from over 60% earlier this month.

However, that has failed to substantially lift the dollar, which last week was caught up in a broad selloff alongside US stocks and bonds.

“We suspect that this US dollar weakness in November reflects speculative traders closing long US dollar positions ahead of heightened volatility as a higher-than-normal rate of US data emissions prevails over the next few weeks,” said Thierry Wizman, global FX and rates strategist at Macquarie Group, in a note.

STERLING DRIFTS

The British pound traded 0.11% lower at USD 1.3161 on Monday, following sharp swings at the end of last week on news that Finance Minister Rachel Reeves has no plans to raise income tax rates in the upcoming budget.

That alarmed investors who had been anticipating a rise to help fill an expected fiscal shortfall, sparking a surge in government borrowing costs on Friday.

Reeves is expected to need to raise tens of billions of pounds to stay on track to meet her fiscal targets in the November 26 annual budget, and financial markets had seen a rise in income tax as the surest way to achieve this.

Against the pound, the euro held near its strongest level in about 2-1/2 years at 88.23 pence.

“It will definitely be more difficult to fill the big budget hole without raising the income tax rate,” said CBA’s Kong.

“Concerns remain that the UK government may not be able to consolidate the budget as much as previously expected, and that could again fuel concerns about the UK fiscal trajectory.”

In other currencies, the yen languished near the 155 per dollar level and last stood at 154.60, leaving traders alert to the threat of intervention from Japanese authorities to stem the yen’s decline.

It hardly reacted to data on Monday, which showed Japan’s economy contracted an annualized 1.8% in the July-September quarter, the first fall in six quarters, due to a hit to exports from US tariffs.

(Reporting by Rae Wee; Editing by Muralikumar Anantharaman)

Stocks cautious as Nvidia earnings test looms

SINGAPORE – Asia’s stock markets struck a cautious tone on Monday as traders looked ahead to a week of corporate earnings and catch-up US data, with the focus on the interest rate outlook and the fate of a frothy rally in artificial intelligence stocks.

Hesitant-sounding policymakers have driven market expectations for a US rate cut in December back from more than 60% a week ago to 40% on Monday and put pressure on stocks.

S&P 500 futures were 0.3% higher in early trade.

Japan’s Nikkei was flat, but tourism and some retail stocks fell heavily after China cautioned citizens against visiting Japan as a diplomatic dispute deepens.

Shares in department store operator Isetan Mitsukoshi and cosmetics-maker Shiseido notched drops of around 10%.

In Australia, a 0.7% drop for BHP after Britain’s high court found it liable for a dam collapse in Brazil weighed on the bourse, which hit a four-month low.

Wall Street indexes recovered from a steep selloff on Friday to notch a mixed close, with a small drop for the S&P 500 and modest gain for the Nasdaq. Ten-year US Treasury yields rose on Friday, held at 4.156% in Tokyo.

JOBS, DELAYED

The headline US data release this week will be Thursday’s delayed September jobs report.

The figures may be too stale to be of much use, since private surveys have already flagged a labour market slowdown. But with 19 appearances by Federal Reserve officials on the cards this week, their framing of the data will also be scrutinized.

On Friday, Kansas City Federal Reserve President Jeffrey Schmid and Dallas Federal Reserve President Lorie Logan sounded hawkish and cast doubt on the need to cut rates next month.

“There are expectations that weaker jobs data and higher inflation will mean balanced risks. Neither is good for risk, as stagflation returns to the lexicon,” said Bob Savage, BNY’s head of markets macro strategy.

Data in Asia showed Japan’s economy contracted for the first time in six quarters due to a hit from US tariffs.

The Nikkei newspaper reported over the weekend that Japan is considering spending around 17 trillion yen (USD 110 billion) in new Prime Minister Sanae Takaichi’s first stimulus package, underscoring her focus on expansionary fiscal policy.

That kept pressure on the yen at 154.54 per dollar and had markets on intervention-watch, while the bond market slid and sent 10-year yields to their highest since 2008.

Some analysts see risks of flight if investors’ faith in fiscal discipline is shaken, much as it was in Britain last week when stocks, bonds, and sterling tumbled on reports that Finance Minister Rachel Reeves was backing away from tax hikes.

NVIDIA EARNINGS

Home Depot HD.N, Target, Walmart, and Nvidia report earnings in the US this week, and all eyes are on the chipmaker, where the market’s response is shaping as a test of the sparkling rally.

“If you don’t see the growth that I think the market is expecting around Nvidia or the positive commentary that we are likely to get from Nvidia going forward, I think you’re going to see more of a dent to those sorts of trades,” Orton said.

Nvidia shares have soared about 1,000% since the launch of ChatGPT in November 2022. This includes a year-to-date gain of more than 40% that made Nvidia the first company to surpass USD 5 trillion in market value last month.

Elsewhere, in foreign exchange, the dollar was up slightly, holding the euro to USD 1.1607 and creeping higher on other majors.

Gold nursed Friday losses at USD 4,084 an ounce. Brent crude futures slipped 1% to USD 63.78 in the Asia morning.

Bitcoin, which has lately behaved as a barometer of liquidity and the mood on technology stocks, was nursing its largest weekly fall since March, having lost more than 10% last week. It traded at USD 94,717.

(Reporting by Tom Westbrook in Singapore; Editing by Jamie Freed)

US yields advance as risk aversion eases, Fed pause in December likely

NEW YORK – US Treasury yields rose on Friday as risk aversion abated, with Wall Street finding its footing after a selloff in the last few days and investors continuing to pare back expectations for a Federal Reserve rate cut at next month’s policy meeting.

Investors earlier in the session sought less-risky assets while they marked time for the reopened US government to resume publishing economic indicators. But selling in risky assets such as stocks eased in the afternoon ahead of the weekend and before a deluge of economic data next week as the government reopens after the record 43-day shutdown.

In afternoon trading, the yield on the benchmark US 10-year Treasury note was up 3.5 basis points (bps) at 4.146%. Bond yields move inversely to prices.

On the week, 10-year yields advanced 5.5 bps, rising in just two of the last seven weeks.

The turn higher in yields coincided with Fed officials on Friday expressing caution about raising interest rates next month.

Kansas City Fed President Jeffrey Schmid, a voter on the policy-setting Federal Open Market Committee, was the latest central bank official to express doubts about a December rate cut. He said on Friday his concerns about “too hot” inflation go well beyond the narrow effects of tariffs alone.

Dallas Fed President Lorie Logan on Friday echoed the sentiment. She signaled that she would oppose an interest-rate cut in December, after also opposing the Fed’s rate cut in October, because of her concern that inflation is too high.

Several Fed speakers in recent days have also expressed reservations about easing next month, based on worries about inflation and what looks like a more stable labor market. Longer-dated yields were depressed in part by a weak 30-year bond auction on Thursday.

“Many Fed officials have favored waiting for data before making a policy decision on December 10,” wrote Action Economics analysts led by fixed-income strategist Kim Rupert.

“And the shutdown not only delayed releasing the numbers, but in gathering them as well, adding to concerns over the quality of the information.”

Markets now price in about a 40% chance of a December rate cut, down from about 90% earlier this month and just over 60% earlier this week.

Rather than restore some market confidence, the reopening of the government this week has fanned risk-off sentiment, with investors worried that gaps in economic data, once they start being released again, will delay or derail Federal Reserve interest rate cuts.

There is doubt about the publication of October’s inflation data, and the employment report will not include the jobless rate, White House economic advisor Kevin Hassett said, because the household survey from which it is calculated was not conducted.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, rose 2.1 basis points to 3.568%. It was up 5.4 bps on the week, the biggest weekly rise since mid-June.

The yield curve steepened on Friday, as the spread between US two-year and 10-year yields rose to 53.2 bps, from 52.6 bps late Wednesday.

The curve showed a bear-steepening scenario, with long-term yields rising faster than short-term rates. This reflected market concerns about a pickup in inflation and expectations that the Fed could pause its easing cycle. The yield on the 30-year bond also rose, up 4.4 bps at 4.746%.

(Reporting by Alden Bentley and Gertrude Chavez-Dreyfuss in New York; Editing by Philippa Fletcher and Matthew Lewis)

Dollar slumps on worries of what clearing US data fog might show

SINGAPORE – The dollar struggled to claw back steep losses on Friday and was on track for a weekly fall, as investors awaited a backlog of US data following the government’s reopening, which they expect will likely point to a weakening economy.

The overnight move lower in the dollar came alongside a selloff in US equities and bonds eerily reminiscent of the market turmoil in April, as investors pared back bets of a Federal Reserve rate cut in December.

“There’s a whiff of ‘sell America’ back in the air,” said Ray Attrill, head of FX research at National Australia Bank.

However, expectations of a more hawkish Fed failed to lift the dollar, which fell to a two-week low against the euro overnight. The common currency bounced back above the USD 1.16 mark and last bought USD 1.1630.

The Swiss franc similarly held near an over three-week high and steadied at 0.7933 per dollar. Against a basket of currencies =USD, the greenback languished near a two-week low at 99.27.

The dollar index was headed for a weekly fall of 0.3%.

“Starting from next week, we’re going to get a lot of economic data from the US, and we think it’s going to be pretty bad. I think that the market is now preparing for the coming deluge of poor US economic data,” said Joseph Capurso, Commonwealth Bank of Australia’s head of foreign exchange, international and geoeconomics.

While that would normally fuel expectations of more aggressive Fed easing to shore up a weakening economy, Capurso said the impending patchy data releases may explain why Fed funds futures have moved the other way.

The White House indicated that the US unemployment rate for October may never be available, since it is dependent on a household survey that was not conducted during the shutdown.

“When you’re in the fog, you drive slower… when you don’t know what’s going on in the economy, maybe you slow down your cuts,” said Capurso.

While investors see less than a 50% chance of a 25-basis-point cut in December, the odds for such a move in January are almost fully priced. Rate expectations for 2026 have also hardly moved.

In other currencies, sterling fell 0.3% to USD 1.3152, failing to sustain its 0.45% overnight gain against a weaker dollar.

The move lower in the pound came after a report by the Financial Times that British Prime Minister Keir Starmer and Finance Minister Rachel Reeves have abandoned plans to raise income tax rates, marking a sharp shift just weeks ahead of the November 26 budget.

“A weakening of fiscal resolve on the back of political uncertainty is not good news for the GBP,” said Sim Moh Siong, a currency strategist at Bank of Singapore.

The battered yen found some reprieve on Friday thanks to the pullback in the dollar, though remained pinned near a nine-month low hit earlier this week. It last stood at 154.58 per dollar.

The Japanese currency was on track for a fall of nearly 0.8% for the week.

Down Under, the Australian dollar fell 0.02% to USD 0.6529, having slid overnight owing to the broad risk-off sentiment.

The New Zealand dollar last bought USD 0.5654, having similarly lost 0.25% in the previous session.

(Reporting by Rae Wee; Editing by Sam Holmes)

Stocks crumble as hopes fade for imminent Fed rate cut

SYDNEY – Asian shares joined a global selloff on Friday as hawkish comments from Federal Reserve officials doused hopes for a US rate cut next month, while a still messy data calendar added to the angst, hitting bonds, the dollar, and even gold.

Japan’s Nikkei tumbled 1.8% on Friday, Australia’s resources-heavy shares slid 1.5%, while South Korea plunged 2.3%.

China will report its monthly activity figures later in the day, after weak lending data flagged concerns from households and businesses to take on more debt amid economic uncertainties.

Overnight, Wall Street tumbled with steep losses in Nvidia and other AI heavyweights on valuation concerns, while Treasuries retreated as investors scaled back expectations of a rate cut from the Fed in December to just 51%, down from 63% a day earlier.

The dollar failed to get a lift on higher yields, losing ground to the likes of the yen and Swiss franc.

“The drawdown seen across assets was pronounced, and looking across the suite of investible markets, there were few places to hide,” said Chris Weston, head of research at Pepperstone.

“With the US government open for business, traders now await the Bureau of Labor Statistics (BLS) schedule for key economic data… So far, positioning has been set largely on Tier 2 data, and that will need to be reconciled against the headline data that truly drives the Fed’s decision-making process.”

The White House, however, dashed hopes for a clearer view of the US economy any time soon, saying that the US unemployment rate for October may never be available. Adding to the downbeat mood and pointing to worries about high inflation, a growing number of Fed officials overnight signaled caution about further rate cuts.

Alberto Musalem, who runs the St. Louis Fed Bank, said there was limited room to ease further without becoming overly accommodative, while Cleveland Fed President Beth Hammack said interest rate policy should remain restrictive in order to put downward pressure on inflation.

Minneapolis Fed President Neel Kashkari told Bloomberg that he opposed a rate cut last month and is on the fence about December.

Treasuries fell overnight as investors pared back bets for a Fed cut next month. Two-year Treasury yields held at 3.597%, having risen 3 basis points overnight, while the 10-year yield rose 1 bp to 4.125%, after gaining 3 bps overnight.

The rise in yields, however, failed to support the US dollar, which was down 0.2% against its major peers overnight and was at 99.254, close to the lowest level in two weeks.

The yen got some much-needed respite and last traded at 154.7 per dollar, just a touch above a nine-month low of 155.05 per dollar. The Swiss franc jumped 0.6% against the dollar.

Sterling, however, lost 0.3% to USD 1.3153 on Friday after the Financial Times reported Prime Minister Keir Starmer and finance minister Rachel Reeves have ditched their manifesto-busting plan to increase income tax rates.

Oil prices rose in early trade but were set for the third straight week of declines. US West Texas Intermediate crude gained 0.4% to USD 58.91, but was down 1.4% this week.

Spot gold prices rose 0.3% to USD 4,183 per ounce, having lost 0.6% overnight to snap a four-day winning streak. It remained well off its record top of USD 4,381.

(Reporting by Stella Qiu; Editing by Shri Navaratnam)

US 10-year Treasury yields priced for no inflation surprises, set to rise modestly

BENGALURU – US 10-year Treasury yields, assuming no upside inflation surprises, are likely to rise modestly in coming months, according to a Reuters poll of market experts, while short-dated yields are forecast to decline on rate cut bets.

The survey results suggest inertia in the world’s largest debt market despite a long list of potential risks, not least of which is a mountain of upcoming supply.

US President Donald Trump’s recently passed budget will require an estimated USD 3 trillion of additional borrowing over the coming decade but that flood of expected issuance has yet to make any significant impact on current pricing.

The benchmark 10-year Treasury yield, currently 4.09%, was forecast to trade at 4.10% in the coming three and six months, before rising to 4.21% in a year, according to median forecasts from over 50 bond strategists surveyed from November 6 to 13. Medians were broadly unchanged from last month’s survey.

Other market pricing, including multiple breakeven rates embedded in inflation-protected Treasury securities, points to lower market-based inflation expectations compared with earlier in the year.

That has coincided with the absence of official government data during the longest shutdown in history that just ended on Wednesday, and still no serious official inflation evidence from US tariffs on imported goods put in place this year.

Jean Boivin, head of the BlackRock Investment Institute, said this reflects a familiar pattern: bond markets are often excessively responsive to near-term developments.

“The implication is it’s very likely the market is over-indexing on the recent track of inflation. And I don’t think you make a good return by positioning in the near-term for what the market will only eventually price in properly. But I do think eventually the market will start to reflect more inflation expectations.”

Indeed, the Federal Reserve’s preferred inflation gauge is running at nearly 3% and has been above the 2% target for over four years. US consumer inflation expectations have also remained elevated through most of the year.

Boston Fed President Susan Collins said on Wednesday that persistent inflation warrants greater caution about the path of future easing, particularly for the upcoming December 17-18 Fed meeting.

According to the poll, the rate-sensitive two-year Treasury yield, currently 3.58%, was forecast to fall to 3.50% in three months and 3.40% in six months.

Interest rate futures remain priced for three-to-four rate reductions by end-2026 despite stark divisions on the Federal Open Market Committee on how soon rates need to fall again.

Over three-quarters of respondents to an additional question, 26 of 34, said the yield curve would modestly steepen by the end of January.

That included Michael Chang, head of rates derivatives strategy at Citi, who said the market was still bracing for higher “term premium” – compensation demanded for holding debt over time – as Treasury issuance continues to rise.

“We’re expecting most of the coupon issuance increase to be announced in next year’s November refunding meeting…And regardless of where the increase happens on the curve, that’s going to translate to repricing for a higher term premium overall.”

“That means the curve is probably going to be steeper, with the long end underperforming the front and the belly of the curve,” Chang added.

(Reporting by Sourav Ganguly; Additional reporting by Jaiganesh Mahesh; Polling by Mumal Rathore and Anant Chandak; Editing by Ross Finley and Sharon Singleton)

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