U.S. Treasury Yields Edge Lower Ahead of Final 2025 Data as Fed Path Remains in Focus

Gerik

Summary:

U.S. Treasury yields slipped slightly on the final trading day of 2025, as investors awaited weekly jobless claims data and continued assessing the Federal Reserve’s next moves following a divided December rate cut decision...

Yields Ease as Market Closes Out 2025

On December 31, 2025, the yield on the benchmark 10-year U.S. Treasury fell by 1 basis point to 4.112%, signaling continued investor caution ahead of key economic data and the New Year. The 2-year yield also ticked lower to 3.446%, maintaining a flatter yield curve as uncertainty about the Fed’s monetary policy path persists.

Yields and bond prices move inversely. A 1 basis point move equals 0.01%.

Full Yield Snapshot (as of 4:10 a.m. ET)

10-Year Treasury: 4.112% (−0.016)
30-Year Treasury: 4.792% (−0.021)
2-Year Treasury: 3.446% (−0.008)
1-Year Treasury: 3.491% (+0.021)
6-Month Treasury: 3.615% (+0.005)
3-Month Treasury: 3.642% (+0.010)
1-Month Treasury: 3.557% (+0.007)

Final Economic Data of the Year in Focus

Markets were largely subdued ahead of the final U.S. data release of 2025: jobless claims for the week ending Dec. 27, scheduled for 8:30 a.m. ET. The labor market data is expected to provide the last clue of the year regarding the economy’s momentum and how it may influence the Fed’s decision-making in early 2026.

Adding to the cautious tone, investors digested the minutes from the Federal Reserve’s December 9–10 meeting, released on Tuesday. The meeting concluded with a rate cut, but the minutes revealed it was a closer decision than the final vote implied, with several members expressing hesitation.

This split has left markets in speculative mode. According to Fed funds futures, traders slightly increased their bets that the next rate cut could arrive by April 2026, though much will depend on how inflation and employment data evolve in Q1.

Stocks Dip, But Treasury Market Remains Anchored

U.S. equity markets held slightly negative following the Fed minutes release. Meanwhile, the bond market appeared steadier, suggesting investors remain focused on yield stability and risk hedging as they transition into a potentially volatile start to the new year.

As 2025 closes, the Treasury market reflects investor patience and caution, with the Fed’s policy path still uncertain amid mixed economic signals. With recession fears largely receding but inflation still not fully under control, 2026 could begin with heightened sensitivity to even minor shifts in macro data and Fed rhetoric.

The coming weeks especially labor, inflation, and consumer spending reports will likely shape expectations for the first Fed decision of 2026, scheduled for late January.

Source: CNBC

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