Source: US Dept. of Treasury End of Day
• Rates decreased slightly last week with the 2-year Treasury note yield decreasing by one basis points to 3.50% while the 5-year note decreased by two basis points to 3.60%.
• With the government reopened, economic clarity is improving, but October and November data remain incomplete. The Fed’s December 9–10 meeting will rely on mostly stale information.
• Markets expect more than a 70% chance of another Fed rate cut, driven by dovish signals, though opinions remain divided. The administration favors lower rates to boost jobs and growth despite inflation risks.
• Beige Book reports weaker labor demand, hiring freezes, and reduced hours rather than mass layoffs. AI is cited as reducing entry-level roles, but structural tech changes are beyond monetary policy influence.
• Shutdown disruptions hurt lower-income households, while wealth gains sustain higher-end retail spending. September retail sales dipped slightly but overall momentum suggests resilience heading into the holiday season.
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