The setup
The U.S. 10-year Treasury yield held the 4% handle in early Asia trade on Wednesday, with Fed Funds futures now pricing in just one cut in 2026 — a sharp repricing from the three cuts implied at the start of the year.
The key moves
- US 10Y: 4.02%, +6 bps WoW
- US 2Y: 4.21%, +9 bps WoW
- Fed Funds futures (Dec 2026): 4.34% (vs 3.94% Jan 2026)
- DXY: 104.8, +1.2 WoW
The repricing tracks the stronger-than-expected Q1 2026 activity data (GDPNow at 2.8% as of April 1) and the March CPI print, which came in at 2.7% YoY (consensus 2.6%, prior 2.4%).
What it means for Asia
- Asian duration under pressure: 10Y CGB +5 bps, 10Y JGB +3 bps
- Asian FX firmer: USD/CNH 7.27 (-0.4%), USD/JPY 158 (+0.6%)
- Bank stocks firm across the region
The Fed has effectively been priced out of 2026. — Morgan Stanley, global rates
Watch list
- April 2026 CPI (May 15)
- The April FOMC minutes (May 21)
- Q1 2026 GDP (April 30)
