Traders work on the floor of the New York Stock Exchange during the morning trading on Nov. 7, 2024.
U.S. Treasury yields retreated on Monday as investors weighed President-elect Donald Trump's Treasury secretary pick and eyed a key inflation reading due later in the week.
The 10-year Treasury yield slid more than 11 basis points at 4.198%. The 2-year Treasury lost nearly 6 basis points, sitting at 4.307%.
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One basis point is equal to 0.01% and yields and prices move in opposite directions.
Trump's choice of hedge fund executive Scott Bessent as Treasury secretary has calmed investors' nerves about the future of the U.S. economy.
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Bessent, the founder of Key Square Group, is expected to back the incoming president's economic goals including gradual tariffs and pro-business policies. However, as an old Wall Street hand and a fiscal conservative, investors believe Bessent will prioritize stability in the U.S. economy and markets.
"The nomination of Scott Bessent to be U.S. Treasury Secretary has been a catalyst for lower bond yields, higher equity indices and a weaker dollar this morning," Kit Juckes, chief FX strategist at Societe Generale, wrote in a note Monday.
"His nomination was greeted positively by markets worried about the size of the U.S. budget deficit and the inflationary impact of tariffs. Whether he can help get the U.S. to 3% GDP growth and a 3% budget deficit time will tell, but for now, he has changed the market mood, if nothing else."
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"I guarantee you, the last thing [Trump] wants is to cause inflation," Bessent said to CNBC in an interview earlier this month before he was picked. "I would recommend that tariffs be layered in gradually."
Some key data points are also in focus during the shortened trading week. Markets are dark on Thursday for Thanksgiving and end early on Friday.
On Tuesday, minutes from the Federal Reserve's most recent policy meeting are expected to be published, as well as the S&P CoreLogic Case-Shiller U.S. National Home Price Index for September.
Several economic updates are expected on Wednesday, but investors will especially be looking out for the October personal spending and income release, which contains the personal consumption expenditures, or PCE, price index, the U.S. Federal Reserve's preferred inflation gauge.
Economists expect a 2.8% year-over-year increase at the core level, excluding volatile food and energy prices, and a 2.3% year-over-year increase at the headline level, per Dow Jones estimates on Friday.
As the final PCE release before the Fed's December meeting, investors will be looking for hints as to the central bank's next policy move.
