Treasury Yields Rise as Fed Holds, But Two FOMC Members Dissent — Market Talk

1422 ET - Treasury yields edge higher as the Fed holds rates unchanged, as expected. FOMC members Lisa Cook and Beth Hammack dissent to support a hike. The post-meeting statement says economic activity is expanding at a strong pace, adding that spending has been resilient, productivity is strong, capital investment is robust and job gains "have kept pace with the workforce," while inflation remains elevated. It states, however, that uncertainty remains elevated due, in part, to "geopolitical developments." The 10-year yield reaches an intraday high of 5.04% following the decision and ahead of Chairman Warsh's presser. The two-year is at 4.78%. ([email protected]; @ptrevisani)1338 ET - Gold futures slip as oil prices rise on Middle East escalation concerns, with the market waiting on the Fed for guidance on interest rates. "While no rate hike is expected, investors are likely to focus on whether the tone turns more hawkish than markets anticipate and what that signals for further increases this year and in 2027," Critical Metals CEO Tony Sage says in a note. Any dovish signs in PCE inflation and GDP numbers later this week could support gold, "while firm data could lift the dollar and weigh on the metal," he says. Front-month gold settles down 0.6% in New York at $4,036.00 a troy ounce. Silver falls 1.5% to $53.457 a troy ounce, its lowest close since Nov. 26, 2025. ([email protected])1322 ET - Long-term bitcoin holders own about 4 million bitcoin that were bought between $85,000 and $118,000 apiece, according to analysts from Glassnode. That means they are generally underwater at the current price level, which is hovering about $80,000, the analysts say. More than half of all of long-term holders' coins were bought above that critical level, they say. If the price recovers toward $85,000, many of those long-term holders may sell to get their money back, the analysts say. ETF demand has faded, though each new dip now realizes smaller losses, they say. ([email protected])1206 ET - RSM Canada economist Tu Nguyen reckons the Bank of Canada's first interest rate increase in more than three years won't be its last. The economist expects the next move as early as December, and more following in 2027. "The tone in the bank's announcement is decidedly hawkish and the message is clear: this is the first hike in a hiking cycle." Nguyen says high oil prices and therefore higher inflation are persistent and no longer transitory. ([email protected]; @RobbMStewart)1159 ET - The Bank of Canada stepped off the sidelines with a quarter percentage point rate increase but its guidance is less committal on the path forward, TD Securities says. It now looks for the central bank to raise again in December, taking the policy rate to an end-of-cycle 2.75%. TD notes the Bank of Canada saying it will proceed gradually. ([email protected]; @RobbMStewart)1143 ET - The U.K. Debt Management Office announced reduced size of long-dated gilts sales in the fiscal year 2026-27, causing their prices to rise and yields to fall. Planned sales of long-dated conventional gilts fall to 15.5 billion pounds in 2026-27, from 22.4 billion pounds announced in April. Planned sales of long conventional gilts through syndication are down by 2.5 billion pounds to 12.5 billion pounds, the DMO says. U.K. 30-year gilt yields fall to a 5-week low of 5.691% following the gilt remit publication, and last trade at 5.709%, LSEG data show. ([email protected])1141 ET - The U.K. budget provided reassurance to investors as the gilt market remains calm following the earlier announcements by Treasury Chief John Healey, says James Sproule, U.K. chief economist at Handelsbanken, in a note. Healey maintained investor confidence by announcing a wide range of small fiscal measures and reiterating the government's commitment to fiscal rules, he says. Ten-year gilt yields fall 1.2 basis points to last trade at 5.329%, Tradeweb data show. ([email protected])1131 ET - There is likely more tightening to come from the Bank of Canada but the pace of further interest rate increases is extremely uncertain and will be driven by incoming data, Bank of Montreal's Benjamin Reitzes argues. Anticipated weakness in fourth-quarter GDP and trade uncertainty give policymakers reason to be cautious, the macro strategist says. If the economy shows better momentum then that is likely to trigger the next move, he says. ([email protected]; @RobbMStewart)1128 ET - Treasury Chief John Healey has bought himself time rather than resolving the U.K.'s fiscal problems, Sanjay Raja at Deutsche Bank says in a note. Although markets reacted positively to the budget, borrowing is expected to remain higher than previously forecast, while much of the promised fiscal tightening is backloaded, raising questions about whether it will be delivered, he says. The tax burden is still on course to reach a postwar high, despite limited new tax increases, and further spending pressures are looming including defense and social care, Raja says. "Put simply, there will be a near GBP25-40 billion fiscal hole to fill in the new year... the U.K. is walking an increasingly fine fiscal line, with the harder choices still to come," he says. ([email protected])1126 ET - The U.K. budget helped to calm the market's nerves and was "fiscally responsible," Joe Nellis at MHA says in a note. The budget successfully provided some breathing space for cost of living pressures, while only a few business sectors face higher taxes, he says. However, concerns about sustainable long-term growth remain. The budget "focused on maintaining fiscal discipline and improving living standards, rather than having a strategy for growth," he says. This makes it "a stabilising budget, but not particularly ambitious." ([email protected])1125 ET - Sterling showed little reaction to Wednesday's U.K. budget but faces potential future volatility as a snap election remains a risk, Caxton's David Stritch says. Treasury chief John Healey dodged serious questions over public spending, council tax overhaul and defence spending, he says. "The footing of an election becomes somewhat obvious as a result and the pound may expect delayed political volatility should an early election be called next year." Sterling falls 0.1% to $1.3297 and the euro rises 0.2% to 0.8371 pounds, both little changed from pre-budget levels. ([email protected])1119 ET - KPMG Canada's Ali Jaffery views the Bank of Canada's policy statement and press release as hawkish, suggesting policymakers will raise interest rates again in December. After that, the economist expects rates to remain steady. Jaffery says the trigger appears to have been the sharp and sustained increase in prices for refined products such as diesel, which featured prominently in the central bank's commentary. On another point, the economist finds it curious the Bank of Canada fresh inflation forecast omits core inflation even as the headline inflation projection has been substantially revised high in the near term. ([email protected]; @RobbMStewart)