The 10-year Treasury yield ticked higher on Friday to 4.095% as the odds of a rate cut on CME’s FedWatch tool fell to 62.9% compared to 72.8% yesterday and 91.7% a week ago.
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The yield has climbed higher since the Fed lowered rates by 25 bps on October 29, accompanied by Fed Chair Jerome Powell saying that a December rate cut wasn’t a “foregone conclusion” and that the decision would be influenced by labor market and inflation measures.
Two Fed Officials Voice Support Against Rate Cuts
On Friday, Dallas Fed President Lorie Logan spoke against the rate cut earlier this week due to a balanced labor market and persistent inflation risks. Logan added that she wouldn’t support a December rate cut unless the labor market continues to weaken or if inflation falls faster than expected.
Kansas City Fed President Jeff Schmid reiterated Logan’s view of the risk of a revival in inflation, adding that a 25 bps cut wouldn’t have a material effect on the labor market, although it could have “longer-lasting effects on inflation.” Schmid was the only Fed official to vote for an unchanged rate during the October Federal Open Market Committee (FOMC) meeting.
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