U.S. Treasury markets rebounded after an early dip, with the 10-year yield closing below 4% for the first time since October. Dovish Fed signals and high expectations for future rate cuts contributed to the market's resilience despite mixed economic data.

ZenZKPlayer

2025-12-01 15:56:13

Abstract generation in progress

U.S. Treasury markets staged a solid rebound Wednesday after an early dip, with bond prices climbing off their session lows to finish essentially flat. The benchmark 10-year yield slipped to 3.998%—a milestone marking its first close below the 4% level since late October—despite hitting 4.042% during morning trading.

Market Drivers

The initial weakness likely stemmed from profit-taking after treasuries’ six-session rally, but selling pressure faded as the day progressed. Key catalyst: dovish signals from Federal Reserve officials kept traders cautiously optimistic about future rate cuts.

CME FedWatch data is wild—odds of a quarter-point rate cut next month soared to 82.9% from just 30.1% a week ago. Even with solid economic news dropping, those expectations barely budged.

Economic Data Mixed

Commercecommerce Department reported September durable goods orders jumped 0.5% (vs. 0.3% expected), following August’s upwardly revised 3.0% surge. Meanwhile, initial jobless claims surprised to the downside at 216,000—the lowest since mid-April—defying economist calls for a 225,000 tick-up.

TL;DR: Bonds shrugged off good economic data to chase the Fed rate-cut narrative. With Thanksgiving wrapping up, Friday’s likely a dud for trading volume.

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