The yield on the US 10-year Treasury note fell nearly 2bps to 4.22% on Monday, supported by a broad risk-off mood and a flight from riskier assets. The move comes as traders recalibrate expectations for monetary policy under a Warsh-led Federal Reserve. President Donald Trump nominated Kevin Warsh as the next Fed chair on Friday, a choice markets view as more hawkish, with Warsh seen as supportive of lower interest rates but less aggressively so than some other potential candidates. He is also expected to rein in the Fed’s balance sheet, a move that could reduce liquidity in the financial system. Markets continue to price in two Fed rate cuts this year under Warsh, even as the FOMC remains divided over the pace and scale of further policy easing. Meanwhile, House and Senate leaders have agreed on a spending deal to keep the government open, though it still requires approval from the House, which could come as soon as today.
