Investors expect the Federal Reserve to hold rates steady this week but raise them in December, while AI-related risk sentiment, inflation and government borrowing continue to shape Treasury yields. The 10-year yield is up 84 basis points this year, and the 30-year yield is up nearly 50.
Treasuries have rallied after a two-month selloff that began in August, as concern about financing problems in part of the AI infrastructure market raised questions about the AI buildout. Investors said money moving from some AI-related trades into bonds may outweigh relatively small shifts in expectations for Fed policy.
Investors expect the Fed to hold rates steady this week but raise them again in December. They are watching what officials signal about inflation and future rates; consumer and producer prices rose in August and September, with elevated energy prices among the main drivers. The 10-year Treasury yield has risen 84 basis points this year, while the 30-year yield is up nearly 50 basis points.
Analysts and portfolio managers said inflation, heavy government and corporate borrowing, and uncertainty over the midterm elections remain pressures on the market. Treasury issuance has increased alongside widening deficits, and the $40 trillion national debt and deficits around 6% of GDP are contributing to volatility and pressure on longer-term yields. Investors surveyed by JPMorgan had the fewest outright long positions since mid-August.
