The yield on US Treasury bonds was almost unchanged against the background of thin market liquidity. At the same time, the minutes of the last Fed meeting remained in the focus of market participants' attention.
The yield on 5-year Treasury bonds grew by 0.8 basis points, reaching 3.906%, while the yield on 30-year bonds was 3.739% (-0.3 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 0.6 basis points to 4.477%, while the yield on 10-year bonds increased to 3.711% (+0.2 basis points). The curve between the 10-year Treasury yield and the 2-year yield remains inverted, sending a warning that the economy may be falling or has already fallen into recession. Now the gap between 10 and 2 year U.S. debt is 77 basis points.
"Some of the Fed's policymakers have noticed that monetary policy has reached a state where it is sufficiently restrictive to achieve the FOMC's goals, and it would be advisable to slow down the rate hike. The overwhelming majority of the meeting participants considered that a slowdown in the rate hike is likely to be appropriate in the near future," the Fed’s November meeting minutes showed.
Futures markets show that investors now expect US rates to peak just above 5% by May next year, and estimate a 75.8% chance that the Fed will switch to a 50 basis point rate hike at the December meeting.