As the final trading week of 2024 begins, treasury yields decline.

On Monday, the final trading day of the year, U.S. Treasury yields decreased.

The 10-year Treasury yield decreased by approximately 8 basis points to 4.537%, while the 2-year Treasury yield fell more than 7 basis points to 4.25%.

Prices and yields move in opposite directions, with one basis point equal to 0.01%.

Despite Monday's decline, the 10-year Treasury yield has increased significantly in the fourth quarter, from 3.8% at the beginning of October. This increase is due to the recent stability of inflation and employment data, causing investors to adjust their expectations for Federal Reserve rate cuts.

The Fed has indicated that fewer interest rate cuts are expected in the near future, as policymakers will make their first rate decision of 2025 in late January. Despite the Fed's cuts, long-term interest rates have risen in recent months, as traders have scaled back their expectations for further central bank action next year.

According to Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute, the Fed rate-cutting cycle is likely to end with only one additional rate cut expected next year. Despite market and Fed expectations of a longer and deeper rate-cut cycle, our projections consistently showed fewer rate cuts due to economic strength and persistent inflation.

On Monday, the economic data released showed a rise in November's pending home sales to their highest level in a year, but the Chicago purchasing managers' index came in at 36.9, below the 42.2 projected by economists, according to Dow Jones.

Last week, data showed that weekly initial jobless claims for the week ending Dec. 21 were slightly lower than expected, while continuing claims for the week ending Dec. 14 reached their highest level since November 2021.

The bond markets will be closed on Tuesday and Wednesday for New Year's Eve and New Year's Day.