With the U.S. economy showing stronger-than-expected growth in the third quarter, U.S. Government Bonds yields rose on the 23rd local time. As growth indicators came in strong, expectations for rate cuts next year also weakened somewhat.
According to electronic trading platform Tradeweb, the two-year U.S. Government Bonds yield, which is sensitive to monetary policy, was 3.55% around the New York market open, up 5 bp from the previous session. A bp is 0.01 percentage point. The 10-year U.S. Government Bonds yield was 4.20% at the same time, up 3 bp from the previous session.
The U.S. Department of Commerce said the third-quarter gross domestic product growth rate was an annualized 4.3% from the prior quarter. It was the highest in two years since the third quarter of 2023, beating the 3.2% forecast compiled by Dow Jones.
Concerns about an economic slowdown had emerged due to a cooling labor market, but the strong confirmation of the growth trend appears to have pushed up Government Bonds yields. Expectations for additional rate cuts by the Federal Reserve next year also weakened.
According to CME FedWatch, the interest rate futures market priced in the probability that the Fed will keep the federal funds rate at the current 3.50%–3.75% through March next year at 54% immediately after the GDP release, up from 47% a day earlier.