U.S. Treasury yields could break out of their consolidation range after several weeks, with the Federal Reserve’s October 28 meeting serving as a potential catalyst, according to BMO Capital Markets. The spread between Bollinger Bands has narrowed to 24 basis points from 80 basis points on September 28, suggesting an impending increase in volatility. The two-year Treasury yield has closed between 4.70% and 4.82% every session since the start of October, while its average daily trading range reached 10 basis points. BMO expects the Fed to hold rates steady in October before raising them by 25 basis points in December, although the market’s roughly 90% probability of a December increase could be revised as new economic data emerge.
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