US Treasury Yields Steady as Global Bond Rally Offsets Strong Economic Data

U.S. Treasury yields showed a mixed performance on Wednesday, balancing between stronger-than-expected economic data and a broad rally in global bond markets. While the latest figures highlighted robust activity in the manufacturing sector, investor interest in long-term debt remained resilient, thanks in part to movements in the UK bond market.

Over recent days, expectations of a potential Federal Reserve interest rate cut in December had driven a rally in Treasuries, prompting some investors to lock in gains. Meanwhile, a sharp rally in UK government bonds limited declines in longer-term U.S. debt, demonstrating how global bond markets often move in tandem.

Economic reports reinforced confidence in U.S. growth. New orders for core capital goods surged in September, accompanied by a strong rise in shipments, indicating continued strength in the industrial sector. At the same time, initial jobless claims fell, signaling a resilient labor market despite ongoing concerns about softer employment trends.

Following the data releases, benchmark 10-year Treasury yields hovered around 4%, while two-year yields inched higher and 30-year yields slightly declined. The yield curve between two- and 10-year bonds flattened modestly, reflecting cautious investor sentiment.

Despite these signs of economic momentum, expectations for a Fed rate cut remain high, with traders anticipating a 25-basis-point reduction in December. The latest Beige Book report suggested little change in overall economic activity, noting weaker employment in several districts and softer consumer spending, factors that support the case for further easing.

In a separate Treasury auction, $44 billion in seven-year notes were issued with moderate demand, requiring a small yield premium to attract buyers. This highlights ongoing investor appetite for fixed-income assets amid a complex global backdrop.

Overall, the Treasury market continues to balance domestic economic strength with global trends, reflecting cautious optimism as investors weigh the path of U.S. interest rates against broader financial developments.