Investors' expectations for 2024 interest rates cause treasury yields to decrease.

On Wednesday, the yields of U.S. Treasury bonds decreased, as investors evaluated the prospects for monetary policy and the financial markets in the upcoming year.

The yield on the dropped nearly 10 basis points to 3.789%, while the yield edged down 5 basis points to 4.238%.

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

In the final week of 2023 trading, investors contemplated the future direction of interest rates and their potential influence on the U.S. economy and financial markets.

The Federal Reserve announced that interest rates will be reduced three times in 2024, with additional cuts anticipated in 2025 and 2026, as inflation has decreased over the past year.

Recent economic data, including the November U.S. personal consumption expenditure price index, has led many investors to believe that the Fed will adhere to its monetary policy expectations for the upcoming year.

Despite uncertainty about when the central bank will begin reducing interest rates, traders are predicting a more than 70% chance of cuts at the March meeting, as indicated by CME Group's FedWatch tool.