The yield on the US 10-year Treasury hovered near 4.22% on Monday, stabilising after sharp swings last week as investors stayed on the sidelines ahead of key US economic data delayed by the partial government shutdown.
Waiting for critical data cues
Markets are largely in wait-and-watch mode with several high-impact releases lined up. The January jobs report, now scheduled for Wednesday, and December retail sales will be closely analysed for signs of further labour market cooling. Meanwhile, the delayed January CPI inflation data, due on Friday, is expected to shape expectations around the Federal Reserve’s next policy move.
Rate expectations anchoring yields
Bond markets are currently pricing in a pause by the Federal Reserve in March, with the first rate cut expected around June, and a possible second cut by September if economic conditions soften further. These expectations have helped anchor long-term yields near current levels.
Volatility eased after last week’s flight to safety
Treasury yields had fallen sharply on Thursday as weak US jobs data, combined with selloffs in technology stocks, precious metals, and cryptocurrencies, triggered a strong safe-haven bid for bonds. That move capped yields and set the stage for Monday’s consolidation.
Sentiment improved, limiting further bond gains
Risk sentiment improved slightly on Friday after University of Michigan consumer sentiment unexpectedly rose to a six-month high, easing fears of an abrupt economic slowdown and preventing a deeper rally in Treasuries.
Bottom line
US 10-year yields are steady because markets are balancing slowing economic signals with improving consumer sentiment, while waiting for delayed inflation and labour data to provide clearer direction on when—and how fast—the Fed may cut rates. Until those numbers arrive, yields are likely to remain range-bound.