U.S. Treasury yields rise as markets anticipate Fed's next move

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U.S. Treasury yields rise as markets anticipate Fed's next move

Financial markets are adjusting to a new landscape this Monday, as U.S. Treasury yields saw an uptick early in the day, with the 10-year note hitting 4.4764% and the 2-year reaching 4.9151%. This shift comes after Federal Reserve Chair Jerome Powell's recent comments and softer inflation data, which included lower consumer and producer price indexes.

The bond market is also preparing for a shortened week due to Thanksgiving, with a closure on Thursday and an early dismissal on Friday. Investors are now looking ahead to Tuesday when the Federal Reserve will release minutes that may provide further insight into the central bank's future interest rate decisions.

Last Friday, the currency and commodity markets responded to various economic cues. The U.S. dollar weakened against major currencies, with the EUR/USD pair peaking at a three-month high and the AUD/USD appreciating in value. Meanwhile, oil prices surged on discussions of production cuts by OPEC+, with WTI closing at $75.89 and Brent at $80.61.

Equity indices presented a mixed picture, with Australia's ASX 200 experiencing a slight decline, while credit markets saw improvement as CDX indices hit new lows for the year.

In commodities, copper prices rose to $8,309 per ton amidst a softer dollar environment, and nickel also saw gains. Iron ore prices fluctuated amid reports of Chinese stimulus but faced pressure from negative housing data signals.

Globally, central banks are exhibiting varying stances on monetary policy. European Central Bank member Villeroy recently pointed out that decelerating inflation trends could justify pausing interest rate hikes, offering a contrast to other central banks' more cautious approaches towards easing policies prematurely.

Looking forward, financial circles are keenly awaiting Tuesday's Federal Reserve minutes for further guidance on interest rates. Additionally, Australia is anticipating the release of RBA minutes and a speech by Governor Bullock for direction in its domestic market, while China expects its loan prime rates to remain steady.

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