Treasury Yields Climb to Three-Week High Before Fed Speakers

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Treasury Yields Climb to Three-Week High Before Fed Speakers.

treasuries & bonds :: 2025-09-25 :: source - bloomberg

By Naomi Tajitsu

The Marriner S. Eccles Federal Reserve building in Washington, DC. Photographer: Al Drago/Bloomberg

(Bloomberg) -- Treasury yields edged up to a three-week high as investors looked to US economic data and comments from Federal Reserve officials for clues on the interest-rate outlook.

Two-year and 10-year notes rose 1 basis point to 3.61% and 4.15%, respectively. Markets are pricing 40 basis points of Fed cuts by year-end, but some investors say lingering inflation risks mean the bonds need to fall further before they’d buy.

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They’ll have plenty of potential catalysts on Thursday, with gross domestic product data, jobless claims and durable goods numbers due. The Treasury will also be auctioning $44 billion of seven-year debt. On top of that, Fed policymakers including Austan Goolsbee, John Williams and Mary Daly are slated to speak.

In particular, investors will be watching to see if Stephen Miran, the Fed’s newest policymaker, builds on his dovish view for more aggressive rate cuts in a Bloomberg TV interview.

Appointed by Donald Trump, Miran’s rate projections at last week’s policy decision indicated his preference for 1.5 percentage points of rate cuts through the end of this year.

“We think there’s a good chance the market will have to price an even deeper cutting cycle,” Morgan Stanley strategist James Lord said. “We’re expecting front end US rates to ultimately fall quite a bit more, maybe 50 basis points.”

The pace of rate cuts will stay elevated into next year, with the Fed reaching a terminal rate as low as 2.75% by the third quarter of next year, Morgan Stanley expects. The US bank sees more easing driving the five-year yield down to 3.25%.

For now — with the outlook on inflation far from certain — Evelyne Gomez-Liechti, multiasset strategist at Mizuho International, says she’s waiting for the 10-year yield to test 4.20% before investors come in to buy.

“Levels to buy the dip are still not looking too attractive,” she said.