From Dow Jones & Company:



U.S. bond yields fell as investors bet on easing inflation and potential interest rate cuts by the Federal Reserve in 2024. The yield on the 2-year Treasury note dropped to 4.242%, the lowest finish since May 17, while the 10-year Treasury note yield fell to 3.788%, and the 30-year Treasury bond yield dropped to 3.944%, all reaching their lowest finishes in several months. The falling yields came after a 5-year Treasury note sale and the easing of inflation to 3.1% in November.

Market participants absorbed the sale of $58 billion in 5-year Treasury notes, driving the further decline of benchmark U.S. bond yields. This decline was propelled by investor bets on easing inflation and the expectation of the Federal Reserve lowering borrowing costs in the coming year. Markets have started pricing in an 85.5% probability that the Fed will leave interest rates unchanged after its next meeting, and there is a high likelihood of at least a 25-basis-point rate cut at the Fed’s subsequent meeting in March. This is reflective of the belief that the Federal Reserve will lower interest rates by 2024.



Read more: 10-year Treasury yield drops to lowest since July amid sale of 5-year notes