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Treasury yields spiked upwards yesterday soon after Fed Chair Powell said that “a December cut wasn’t a foregone conclusion – in fact, far from it”.That one single line was enough to trigger a hawkish repricing in interest rate expectations. The December cut probability fell from almost 100% to 70% now. That’s still high in my opinion, as it should be at least 50% as Powell also added that in
case they don’t get the data due to the shutdown, they might as well skip the December cut. On the daily chart above, we can see the 10 year Treasury yield. Right now, we are just erasing the drop triggered by Trump’s escalation two weeks ago. That escalation is what triggered a dovish repricing, so it’s just common sense that we go back to previous levels. Technically, a move into 4.20% should be in the cards.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The Fed’s hawkish tone just shifted the interest rate landscape dramatically. With Chair Powell’s comments, traders need to reassess their positions, especially those betting on a December rate cut. The drop in cut probability from nearly 100% to 70% signals a tightening sentiment that could ripple through various markets, particularly equities and commodities. Higher yields typically strengthen the dollar, which could pressure gold and crypto assets as investors seek safer havens. Watch the 10-year Treasury yield closely; if it breaks above recent highs, we could see further shifts in market sentiment. But here’s the flip side: if economic data in the coming weeks shows signs of weakness, those expectations could shift again, leading to volatility. Keep an eye on the upcoming jobs report and inflation data, as they could either reinforce or challenge Powell’s stance. This is a pivotal moment for traders—adjust your strategies accordingly.
📮 Takeaway
Monitor the 10-year Treasury yield; a breakout could signal further market shifts, impacting equities and commodities significantly.
