Yields Volatile After Fed Cut; Markets Await PCE

The U.S. Treasury conducted a Dutch (uniform‑price) auction of 5‑year notes as Treasury yields have been volatile since last week’s 25 basis‑point Federal Reserve rate cut, alternately selling off and then stabilizing. Fed Chair Jerome Powell warned of “two‑sided risks,” saying easing too aggressively could revive inflation while leaving the door open to future cuts, comments echoed by other cautious Fed officials. Money markets price a better‑than‑90% probability of a 25 bp cut in October and roughly 44 basis points of easing this year. Traders are awaiting Friday’s personal consumption expenditures inflation report for clearer policy direction. Added uncertainty from a possible month‑end U.S. government shutdown and several incoming U.S. economic releases is keeping investors cautious, while European markets mirrored the tone with German 10‑year Bund yields around 2.74% and softer stock futures. Overall, markets remain in a wait‑and‑see mode as policymakers balance sticky inflation, a cooling labor market and geopolitical risks.