Treasury yields fall Monday after strong 20-year notes auction

Yields declined Monday following a Treasury Department auction that saw solid demand, as investors assessed the chances that the Federal Reserve’s interest-rate hiking cycle is over.

At 3:13 p.m. ET, the yield on the 10-year Treasury was down more than 2 basis points at 4.418%. It had briefly touched its lowest level since September with 4.379% on Friday. The 2-year Treasury yield was marginally higher at 4.913%.

The yield on the 20-year Treasury declined 3 basis points at 4.777% after a strong auction of $16 billion worth in bonds on Monday afternoon. The bid-to-cover ratio, a measure of demand, on the 20-year Treasury was 2.58. That’s slightly higher than the average of 2.52, according to BMO Capital Markets.

Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.

TreasurysTICKERCOMPANYYIELDCHANGEUS1MU.S. 1 Month Treasury5.392%-0.008US3MU.S. 3 Month Treasury5.424%+0.003US6MU.S. 6 Month Treasury5.445%-0.01US1YU.S. 1 Year Treasury5.254%-0.012US2YU.S. 2 Year Treasury4.881%-0.03US10YU.S. 10 Year Treasury4.416%-0.006US30YU.S. 30 Year Treasury4.58%+0.005

The auction came as investors assessed the outlook for the economy and Federal Reserve monetary policy, as hopes that the central bank is done hiking rates grew in recent weeks.

That came after both the producer and consumer price index came in lower than expected last week, suggesting that inflation is easing and the Fed’s interest rate hikes are having the desired effect of cooling the economy.

The Fed is due to meet once more this year in December and markets are widely expecting interest rates to remain unchanged then.

Investors are considering when the Fed will begin cutting rates — a question Fed officials have not addressed in detail. The topic was not discussed at the central bank’s latest meeting, Fed Chairman Jerome Powell said at the time, but many investors are hoping that this may change based on recent economic data.

Minutes from the Fed’s last meeting earlier this month are due to be released Tuesday and could shed some light on the central bank’s considerations and expectations.

Bond markets will remain closed Thursday for Thanksgiving.

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