Treasury yields fall to 4.97% ahead of busy week of rate decisions and corporate earnings
Key Facts
Markets are bracing for a busy week of monetary policy decisions, corporate earnings and economic data, as the yield on the 10-year U.S. Treasury fell to 4.97% on Monday from 5.00% late Friday. The Federal Reserve is due to conclude its meeting on Wednesday, while the European Central Bank’s meeting begins Wednesday and runs through Thursday. The Bank of Canada will announce its interest rate decision and monetary policy report on Wednesday at 09:45 Eastern time, followed by a news conference at 10:30. The Bank of Japan’s policy meeting runs Oct. 29 and 30, with its policy statement due on the second day. These dates, along with corporate earnings and upcoming U.S. data, are in focus for investors this week.
Attention is turning to the Fed’s decision on Wednesday, with the Associated Press expecting the central bank to leave interest rates unchanged after raising them at its September meeting. According to EL7’s calendar data, the Fed raised its rate to 4% on Sept. 16, from 3.75% at the previous decision. Although rates are expected to hold steady this week, the AP said markets still expect another increase at the December meeting. The meeting comes as the 10-year Treasury yield has fallen from above 5.30% earlier in October to 4.97% on Monday. In Monday’s session, the yield also declined from 5.00% late Friday, while Brent crude fell 1.2% to $110.31 a barrel. The AP did not link the yield decline to a single direct cause, while U.S. stocks closed the previous week lower for a second consecutive week.
Markets are watching results from a large number of companies, with the Associated Press saying about one-third of S&P 500 companies are scheduled to report quarterly results this week. Alphabet reports on Wednesday, while Amazon and Intel report on Thursday, according to the AP. Microsoft has also set Oct. 28 as the date for reporting results for the first quarter of its fiscal 2027. The AP said results from major technology companies could help assess whether AI spending is translating into future growth and profits. In Monday trading, the S&P 500 rose 0.4% after falling for a second consecutive week. Microsoft shares closed at $524.51, and Amazon at $248 on Oct. 23, according to EL7 data.
The week’s picture will be completed by U.S. growth and inflation data, with economists expecting gross domestic product to have grown 1.7% in the third quarter, after growth of 2.2% in the second quarter. The advance estimate of growth is due Thursday. The Associated Press also forecast that inflation, as measured by the personal consumption expenditures index, rose to 3.7% in September from 3.4% in August. The index is the Fed’s preferred inflation gauge; the central bank targets inflation of 2%. The monetary policy calendar includes no Bank of England decision this week: the next Monetary Policy Committee meeting is scheduled for Nov. 5, while the currently published Bank Rate is 3.75%.