Anticipating a December interest rate cut in the USA, bond yields plummeted significantly due to the as-expected Consumer Price Index (CPI).

November 13, 2024 23:16 JST
Following the as-expected October Consumer Price Index (CPI) in the US, bond yields decreased. Background factors include increased expectations of a 25 basis point (bps, 1 bps = 0.01%) rate cut in December.

The yield of 2-year bonds sensitive to US financial policies temporarily decreased by 9 basis points, reaching 4.25%. The yield of 10-year bonds decreased by about 5 basis points to 4.38%.

The swap market has priced in about a 75% chance of an additional rate cut at the December meeting. This was around 56% before the data release. The total expected rate cut by June next year is estimated to be around 60 basis points.

Lindsey Rothner, Head of Multi-Sector Bond Investments at Goldman Sachs Asset Management, pointed out that with the core CPI as expected, the US monetary authorities are heading towards a rate cut in December. He stated, 'Given the slightly hot data in autumn, this statistics eases concerns that the pace of rate cuts is slowing down.'