The yield on the 10-year US Treasury held at around 4.2% on the first trading day of 2026, as market activity remained thin following the holidays. Investors continued to weigh the Federal Reserve’s interest rate path this year, focusing on upcoming economic releases, including December payrolls due next week, which could shed light on the labor market and its implications on interest rates. Earlier this week, minutes from the FOMC’s December meeting showed growing openness among policymakers to easing monetary policy if inflation continues to cool, although officials remained divided over the timing and scale of potential cuts. Traders are pricing in two rate cuts, compared with the Fed’s projection of one. Markets are also watching Fed leadership, with President Trump set to name Powell’s successor early this year amid speculation of a dovish pick.
