Part 3/6:
Diverging Responses in the Interest Rate and Equity Markets
The bond markets reflected a cautious stance. Short-term government bonds, which are highly sensitive to interest rate outlooks, experienced slight declines. The two-year Treasury yield decreased by two basis points to 3.74%, signaling some investor hesitancy about near-term rate expectations.
Conversely, the 10-year Treasury note edged higher by two basis points, closing at 4.29%. This slight rise suggests that longer-term inflation expectations remain somewhat elevated, maintaining the outlook that the Fed might need to keep rates higher for longer.