U.S. 10-year Treasury yields rise as investors weigh Fed decision

• The 10-year Treasury yield rose over one basis point to 4.267%, while the 30-year yield increased about three basis points to 4.89%
• Governor Waller dissented by calling for a 25-basis-point cut, though analysts say dissenting votes do not threaten Fed independence as a stable majority remains insulated from political pressure
• Julius Baer expects a cumulative 50-basis-point rate cut in the first half of 2026 due to labor-market weakness, more than markets currently price in, and maintains a slight overweight stance on U.S. fixed income

Summary: U.S. 10-Year Treasury Yields Rise Following Fed Rate Decision

U.S. Treasury yields increased Thursday after the Federal Reserve held interest rates steady at its January meeting. The 10-year Treasury yield rose more than one basis point to 4.267%, while the 30-year yield climbed approximately three basis points to 4.89%. Two-year note yields remained flat at around 3.584%.

Federal Reserve Decision:

The Fed maintained its benchmark rate at 3.5%–3.75% range at its January 2026 meeting, as expected by markets. This follows three "insurance" rate cuts delivered in late 2025. The decision comes as the central bank addresses questions about its independence and awaits new leadership.

Market Dissent:

Governor Waller dissented from the majority decision, advocating for a 25-basis-point cut. However, analysts at Julius Baer noted these dissenting votes don't threaten Fed independence, as a stable majority of policymakers remain insulated from political pressure.

Outlook and Implications:

Julius Baer projects a cumulative 50-basis-point rate cut during the first half of 2026, citing sufficient signs of labor-market weakness. This forecast exceeds current market pricing. The firm maintains a slight overweight stance on U.S. fixed income, noting that historical patterns show prolonged Fed pauses followed by cuts have typically supported stronger returns on longer-dated bonds along the yield curve.

Investment Strategy:

The analysis suggests potential opportunities in longer-duration Treasury securities, particularly if the Fed delivers anticipated rate cuts in coming months, which could benefit investors positioned in the back end of the curve.