U.S. Treasury bonds recover some losses from last week as the market bets that data recovery will boost rate cut expectations.

Golden Finance reported that, with the UK government bonds leading the way, US Treasury bonds have regained some ground lost last week. Despite an early setback in the corporate bond market at the start of the week—Amazon issued $12 billion in dollar-denominated bonds (its first dollar bond issuance since 2022)—the rebound in Treasury bonds was maintained. Also on Monday, the index measuring factory activity in New York unexpectedly rose to its highest level in a year. Nevertheless, most Treasury yields still fell by 1 to 3 basis points. Earlier predictions suggested that the final recovery of federal economic statistics, following the six-week US government shutdown that ended last week, would revive the prospects of the Fed lowering interest rates again next month. Morgan Stanley's interest rate strategists predict that by mid-2026, the yield on 10-year US Treasury bonds will fall to 3.75%, and in the most bullish scenario, it could even reach 2.40%. While the fate of some US economic reports that were not released during the shutdown remains unclear, the Bureau of Labor Statistics announced it will release the September data originally scheduled for October 3 on November 20. The Fed cut rates by 0.25 percentage points in September and October in response to signs of weakening labor demand, even though inflation still exceeds its 2% target.