Analyst: Powell's Acknowledgment of Labor Market Weakness as a Driver for US Treasuries

Deep News12-11

Madison Investments' Fixed Income Director Mike Sanders noted in a report that the ongoing steepening of the US Treasury yield curve highlights a key point about the impact of monetary policy actions.

He stated, "Policy moves can significantly influence the front end of the yield curve, but long-term structural issues—including above-target inflation and massive fiscal deficits—will continue exerting pressure on the back end." Sanders added that Federal Reserve Chair Jerome Powell's acknowledgment of labor market softening quickly spurred buying in the bond market, reversing the initial decline in Treasuries and further steepening the yield curve.

Madison anticipates a slower pace of additional Fed easing moving forward and expects the central bank to hold rates steady until Q2 2026.

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