By Vivien Lou Chen and William Watts
Treasury yields edged slightly lower Monday morning, with the 10-year rate falling further into its lowest level of the year, amid worries about the outlook for economic growth against a backdrop of sticky inflation.
Yield moves
— The yield on the 2-year Treasury note BX:TMUBMUSD02Y was at 4.184%, down from 4.192% at 3 p.m. Eastern on Friday. Yields and debt prices move opposite each other.
— The 10-year Treasury note yield BX:TMUBMUSD10Y fell to 4.399%, after finishing Friday’s session at 4.419% or its lowest closing level since Dec. 17, according to 3 p.m. Eastern time figures from Dow Jones Market Data.
— The 30-year Treasury bond BX:TMUBMUSD30Y yielded 4.687%, down from 4.667% late Friday.
Market drivers
Treasury yields were slipping on Monday, extending declines seen last Friday on weak economic data and rising concerns about the health of the U.S. consumer. A stock-market selloff on Friday, which saw the Dow Jones Industrial Average DJIA and S&P 500 SPX log their biggest one-day percentage falls of 2025, helped fuel flight-to-safety buying interest in Treasurys and dragged down yields.
On Friday, the S&P Global U.S. services purchasing managers index fell to 49.7 – a 25-month low and below the 50 threshold, which marks a contraction in activity. Data from the University of Michigan also showed a rise in inflation expectations and a drop in consumer sentiment, while, separately, January existing-home sales fell. The batch of data came a day after disappointing guidance from retail behemoth Walmart Inc. (WMT), which stirred worries over the health of the American consumer.The week ahead brings more U.S. economic data, including the January personal-consumption expenditures, or PCE, price index on Friday, the Federal Reserve’s preferred inflation gauge. Fed officials have indicated they are in no hurry to resume cutting interest rates, a stance that appears “fully justified as there does appear to be evidence that uncertainty around government policy, particularly on tariffs, is leading to concerns of higher inflation,” Steve Barrow, head of G-10 strategy at Standard Bank, said in a Monday note.Treasurys have recovered from a hotter-than-expected January CPI reading earlier this month – and Friday’s PCE reading may offer more reassurance with consensus forecasts for a modest 0.3% monthly rise in the headline and core readings, Barrow said. “Nonetheless, while inflation expectations are pointing upwards we still see a risk that 10-year Treasury yields could test the 5% barrier again.”Over the past weekend, Germany’s elections produce no jarring surprises, with the center-right Christian Democratic Union and its Bavarian sister party, the Christian Social Union, garnering the most votes. The far-right Alternative for Germany party roughly doubled its share of the vote from the last election in 2021, but slightly underperformed polls. The result is expected to allow the CDU/CSU and the center-left Social Democratic Party to form a grand coalition government, though several weeks of wrangling likely lie ahead.
-Vivien Lou Chen -William Watts
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02-24-25 1052ET
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