U.S. Treasuries Face Persistent Selling as Rate Cut Timing Remains Unclear

American debt markets continued their downward trajectory on Friday, with bond prices coming under renewed pressure as lingering uncertainty around interest rate policy persists into the new year. The benchmark ten-year Treasury note yield climbed 2.4 basis points, reaching 4.187 percent, reflecting the broader decline in bond valuations throughout the trading session.

Mixed Signals on Fed Rate Cuts

The weakness in treasuries stems largely from the lingering confusion surrounding the Federal Reserve’s interest rate trajectory. While market participants broadly anticipate at least one additional rate cut by the Fed this year, the timing remains up in the air. CME Group’s FedWatch Tool reveals divided sentiment, with an 82.8 percent probability that the central bank will maintain rates at its meeting scheduled for later this month.

This uncertainty is keeping investors cautious, as they lack clear signals on when the next policy shift might occur. The absence of consensus on rate-cut timing has left traders unsure about the appropriate pricing for fixed-income securities.

Muted Trading Activity Weighs on Momentum

Trading volumes remained relatively restrained on Friday, partly due to some market participants still being away from their desks following Thursday’s New Year’s Day holiday. The lack of major economic releases also dampened activity, as traders braced for a busy week ahead.

Next week’s calendar includes several critical reports, most notably the monthly employment data, which could provide fresh clarity on economic conditions and potentially influence Fed decision-making. Until those reports arrive, many participants appear content to remain on the sidelines, contributing to the lingering weakness across the fixed-income complex.