The US Treasury yield curve continued to flatten in October, and the 10-year Treasury yield fell 5 basis points (bps) to end the month at 4.11%. Volatility declined despite the ongoing US government shutdown, the longest shutdown on record. This has resulted in some economic data points going unreported or delayed. The Fed cut interest rates by 25 bps for the second month in a row, though a divergence of opinions on the path of future cuts was more significant among FOMC voters. In the subsequent press conference, Fed Chair Powell warned that a rate cut in December was “far from a foregone conclusion,” which led the market to reduce odds of a December cut from 95% to 70%.

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