U.S. Treasury bonds are finally showing signs of relief, moving toward their first gain in five trading sessions as markets grow increasingly focused on upcoming comments by the Federal Reserve Chair. The yield on the 10-year note dipped to around 4.13%, a modest drop but enough to signal that the pressure pushing rates higher may be easing. Softer inflation data and shifting expectations that the Fed may pause or even begin easing policy have sparked demand for safe, income generating bonds.
Longer-term issues led the decline, with yields falling slightly more at the back end of the curve than in shorter maturities as investors reach for duration in a nervous market. Investment-grade corporate debt also benefited: credit spreads tightened, and high-quality fixed income saw renewed interest, especially after recent economic reports hinted at cooling growth momentum.
What’s driving this turnaround? Much hinges on what Powell will say next. Traders are hoping for signals that either confirm the current tightening cycle is all but over or that the Fed will shift toward cuts. With growth softening and inflation gradually coming under control, bond investors see potential upside if monetary policy begins easing. The behavior of U.S. Treasuries suggests a market recalibration: less concern about aggressive hikes, more optimism about stabilizing yields and securing income.
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