Rate cut doubts drive US treasuries sell-off

Fri 10/25/2024

by Ellie LeTu

Source: Financial Times

• Large sell-off increased US 10-yr yields to 4.2%

  • Investors are concerned about the possibility of more rate cuts given recent political scene.

    • Uncertainty drives large sell-off of bonds.

  • Higher yield has strengthened the US dollar, FX has risen by 3%.

• Fear of rate cuts pause comes from more than just politics

  • Employment report in 09/2024 exceeded expectations.

  • Price surges of commodities such as gold and silver.

  • Rise in popularity of term premium, which compensates long-term bondholders for added risk.

• Opposing arguments believe rate cuts are still happening

  • October data has not come out

    • Economic impacts from recent strikes and hurricanes still being assessed.

  • Inflation remains controlled at around 2%.