Russell Investments: U.S. 10-Year Treasury Yield Near Fair Value Despite Drop Below 4%

Key TakeawaysRussell Investments said the U.S. 10-year Treasury yield, now below 4%, remains close to fair value.The firm expects a weaker labor market and moderating service-sector inflation in the coming months.Russell anticipates the Federal Reserve could proceed with another interest rate cut this month.Treasury Yields Align with Market FundamentalsAccording to Jinshi Data, Russell Investments noted that despite the recent decline in the 10-year U.S. Treasury yield to below 4%, the yield level remains fundamentally aligned with fair value estimates.The firm’s outlook suggests that current Treasury pricing reflects balanced risk expectations, with the market already accounting for slower growth momentum and cooling inflationary pressures across key sectors.Fed Policy Outlook: Rate Cuts Expected to ContinueRussell assumes that a gradual labor market slowdown and moderate inflation in services will support a dovish policy stance from the Federal Reserve.The investment firm expects the Fed to continue cutting rates this month as part of its broader effort to stabilize borrowing costs and support growth amid softening economic indicators.Economists widely agree that the yield curve remains consistent with a late-cycle environment, where fixed income assets are becoming increasingly attractive to institutional investors seeking stability.