2025.12.2314:00:32UTC+00US 10-Year Yield Tests 3-Month High

On Tuesday, the yield on the 10-year US Treasury note climbed to 4.19%, nearing its peak since early September. This increase comes amid signs of a robust GDP growth, which has dampened expectations that the Federal Reserve might implement multiple rate cuts next year. The preliminary report for third-quarter GDP showed an annualized growth rate of 4.3%—far surpassing the anticipated 3.3%—marking the most significant rise in two years. This stronger growth challenges recent worries that tight financial conditions have weakened the labor market, thereby bolstering the position of the Federal Open Market Committee's (FOMC) more hawkish members for the upcoming year. The latest forecasts reveal that Fed policymakers are envisioning a median of one rate cut next year, contrasting with market predictions that anticipated two cuts. Additionally, both headline and core Personal Consumption Expenditures (PCE) prices have increased, thereby limiting the potential for a more relaxed monetary policy.