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U.S. Treasury yields fell on Friday after bets increased that the Federal Reserve would adopt a large interest rate cut.
Bill Dudley, former president of the Federal Reserve Bank of New York, said on Thursday that there is a strong possibility of a 50 basis point interest rate cut at the US central bank’s meeting on September 17-18.
Market participants pointed to factors that boosted bets on a large Fed cut next week, including reports in the Wall Street Journal and Financial Times that highlighted that the size of the first cut may be an inevitable decision for Fed officials.
The yield on the 10-year Treasury note was last at 3.662 percent, down from 3.68 percent yesterday. The yield on the 2-year Treasury note fell to 3.578 percent from 3.648 percent yesterday.
The spread between 10-year and 2-year yields widened to 8.7 basis points, the widest since July 2022. Investors closely watch the curve for clues about the economy’s performance.
