US 10-year yield at 4.95%: 72% odds of a December Fed hike
In short
- The 10-year US Treasury yield is 4.952% (October peak: 5.3645%) and the 2-year yield is 4.612%.
- Futures price a 72% chance of a Fed hike in December; the total tightening priced in is 55 basis points, down from more than 70 a month ago.
- Today the ISM manufacturing index is due (10:00 a.m. New York); on Friday the jobs report, with a forecast of +65,000 jobs after 29,000 in September.
The US 10-year yield is about 4.95%, and markets give a 72% chance of another Fed rate hike in December. Figures are from 7:00 a.m. Sofia time and will move before the afternoon data.
What happened
According to MarketScreener, futures price a 72% chance of a quarter-point hike in December, and the total tightening priced in is 55 basis points (it was above 70 a month ago). The 10-year yield is 4.952%, below the October peak of 5.3645%, and the 2-year yield is 4.612%. investingLive reports that Fed Governor Logan said at least two more quarter-point hikes are needed.
Data this week: the ISM manufacturing index for October today (10:00 a.m. New York, New York time); AMD results and the US midterm elections on Tuesday; and the October jobs report on Friday, with a forecast of +65,000 jobs (September: 29,000) and unemployment at 4.2%. Third-quarter GDP grew 3.4%, which one analyst told Kitco gives the Fed room to keep raising rates.
Gold is about $3,898 an ounce (+0.6% today) after losing 6.8% in October. Gold pays no interest, so higher yields usually make it less attractive next to bonds; yet Kitco noted that gold fell on Friday even with a weaker dollar and lower yields.
What it means for you
The math: $10,000 in 10-year US Treasuries at a yield of 4.952% pays about $495 a year, before fees and tax. An ounce of gold ($3,916) at the same yield would earn about $194 a year, which is the “interest” a gold bar does not pay. This only compares the numbers; it ignores price moves in either asset.
Live prices: gold prices in the US; related: the US week ahead: elections, jobs and Fed risk.
Bottom line
The 10-year US yield is 4.952% and the chance of a December Fed hike is 72%. Today’s ISM data and Friday’s jobs report will show whether that pricing holds.
Sources: MarketScreener · investingLive · Kitco
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For information only. This is not investment advice.
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