Govies gain after Dovish statements from the Fed

📍 Treasury bonds continued their November rally as investors assessed mixed sales of US government paper in the context of wagers that the Federal Reserve will stop raising interest rates. Strong demand was seen in the $55 billion auction of five-year notes, which came after a tame $54 billion sale of two-year bonds. The benchmark 10-year yield fell to 4.4%, a six-basis point decrease.

📍 The largest bond market in the world has recovered after going through tough periods during 2023. Many US debt observers now believe that the route is clear for a true comeback. Early this month, the Bloomberg US Treasury Index moved to a positive return for the year as measured job growth and indications of lowering inflation sparked a rally that sent rates plunging from their highest point in over ten years.

📍 This week will give traders plenty of opportunity to determine whether that cooling trend is intact. Despite the Fed’s message during the last meeting, the market seems to have embraced the idea that slowing economic data will hasten the arrival of market-friendly rate cuts.

Source: Bloomberg