U.S. Treasury Yields Fall in Asian Trade; Wednesday's Fed Decision, Comments Awaited

By Emese Bartha

U.S. Treasury yields fell in Asian trade on Monday, in the run-up to the Federal Reserve's interest-rate decision on Wednesday.

Money markets have long ago priced out expectations of an interest-rate hike on Oct. 28, currently assigning a 90% probability for the Fed to leave interest rates unchanged, according to LSEG data.

The two-year Treasury yield declined by 1.5 basis points to 4.666%, while the 10-year Treasury yield fell 2 basis points to 4.967%, according to Tradeweb. The 10-year Treasury yield hit a 24-year high of 5.365% on Oct. 7.

In the past few days, investors' concern over France's fiscal challenges and the risk that high oil prices could dent economic growth have prompted a search for safe havens, benefiting U.S. Treasurys and pushing their yields lower.

Regarding the Fed's rate decision on Wednesday, BondBloxx Investment Management would focus less on the rate decision itself and more on whether the Fed leaves the door open to additional tightening. Markets currently view October as a pause, not necessarily the end of the tightening cycle, said senior investment strategist JoAnne Bianco.

"Historically, central banks are reluctant to respond directly to an energy price shock because higher interest rates cannot produce more oil," she said. "The key question is whether higher energy prices stay confined to headline inflation or begin influencing broader inflation dynamics."

The outlook for the Fed's rate path is more uncertain "and will depend on the ongoing conflict in the Middle East, the strength of the U.S. economy and developments in financial conditions," said Elisabet Kopelman, U.S. economist and Fed watcher at SEB.

For now, SEB remains of the view that the Fed will raise rates one more time in December, followed by renewed cuts by year-end 2027 and in the first half of 2028.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

October 26, 2026 03:06 ET (07:06 GMT)