US 10Y TREASURY: NFP on schedule

Regardless of a Thanksgiving Holiday in the US, during the previous week the 10Y US Treasury yields slides back till the levels from October this year. The yields started the week around the level of 4,42% while they are ending the week at 4,17%. Feds favourite inflation gauge, the PCE Price Index was released early in the week, which was in line with market expectations. On the other hand, FOMC November meeting minutes were released suggesting a Feds members conclusion that in case of further inflation relaxation and labour data in line with their expectations, there will be a case for further rate cuts.

At this moment, the CME FedWatch Tool suggests 66% odds that the Fed might cut interest rates by another 25 basis points at their December meeting. The US Treasury yields reacted to these expectations. As per current sentiment, there is still space for a further drop in yields, at least until the market properly tests the 4,0% level. It should be considered that Non-farm Payrolls are scheduled to be released in a week ahead, in which sense, some volatility might follow the US yields.