The 10-year US treasury yield (UST10Y) continues to retreat after failing to move above 5%. It is currently hovering around 4.66% to 4.67%. The levels to watch for a breakdown are Its 50-day moving average which is at 4.54% presently, and the neckline of a potential top formation by the UST10Y which is likely to be at 4.61%.
Market watchers are somewhat balanced between hawks and doves. Some economists believe that the Federal Reserve is likely to raise the Fed Funds Rate (FFR) one more time this year, during the December Federal Open Market Committee meeting. Equally, other economists have the view that there will be no more rate hikes this year, with either stable rates in 2024, or possibly a cut by 2H2024.
The prospect of a cut in 2H2024 sounds unlikely as market behaviour isn’t pointing to the extreme dovish outlook currently. Instead, the path is likely to be somewhere in the middle with possibly no more rate hikes, but with the likelihood of rate cuts a low probability.
