Yields Fall, Bank Credit Keeps Growing: A Quieter Week in Rates

Yields step down

The 10-year Treasury yield stood at 4.96% on October 22, down 0.17 percentage points from 5.13% on October 21, according to the Federal Reserve's H.15 release. The move followed a nearly flat stretch: the yield had edged down 0.03 percentage points on October 20 and up 0.01 on October 21, so the October 22 decline was the week's decisive move. An Emirates NBD daily outlook noted that the 10-year yield fell below 5% for the first time in roughly a month. m:…5176 m:…4048

The 2-year yield moved in step, standing at 4.65% on October 22, down 0.16 percentage points from 4.81% the day before. It had risen 0.02 percentage points on each of the two prior days, so the decline reversed a small upward drift rather than extending a slide. Over the longer run both yields remain well above year-earlier levels: the 10-year is 0.96 percentage points above 4.0% on October 20, 2025, and the 2-year is 1.19 points above 3.46% a year earlier. m:…4741 m:…5176

Bank balance sheets expand

Commercial bank balance sheets kept growing in the latest H.8 data. Total deposits stood at $19,810.3 billion on October 14, up $38.72 billion, or 0.2%, from October 7. That was the fourth consecutive weekly rise, though the increase was smaller than the $55.95 billion gain on September 30 and the $77.44 billion gain on October 7. Compared with a year earlier, deposits are $1,306.04 billion higher than $18,504.3 billion on October 15, 2025, a 7.1% increase. m:…3169

Lending grew alongside deposits. Total loans and leases stood at $14,213.7 billion on October 14, up $29.31 billion, or 0.2%, from $14,184.4 billion on October 7, the sixth consecutive weekly increase. The prior two weeks had seen gains of $34.97 billion and $44.13 billion, so the pace eased even as the level kept rising. Year over year, loans are $1,045.18 billion above $13,168.5 billion on October 15, 2025, up 7.9%. m:…0392

Policy rates hold steady

The overnight policy backdrop was unchanged in the same data. The federal funds effective rate stood at 3.88% on October 22, flat against October 21 and the day before, and 0.24 percentage points above 3.64% on February 12, a 6.6% rise over that span. Interest on reserve balances stood at 3.9%, steady across October 24 through 26 in the release, and 0.25 percentage points above 3.65% on February 16, up 6.8% over the year. m:…9953 m:…8737

The combination matters for bankers reading the week: market yields fell while the administered policy rates did not move, and bank credit expanded at the same time. That pattern points to a market repricing rather than a policy shift, with deposits and loans still growing into it. m:…5176 m:…3169 m:…0392

Elsewhere in the week's data

Equities fell on the same Thursday that yields dropped below 5%, with the S&P 500 losing 1.2% and the Nasdaq composite falling 2.6%, according to the Emirates NBD outlook. Brent crude rose 4% to settle at $113.17 a barrel that day, and United States jobless claims fell by 6,000 to 194,000 in the week ending October 17. m:…4048

Abroad, the Central Bank of the Republic of Türkiye cut its policy rate by 100 basis points to 36%, as annual inflation in Türkiye eased to 29.7% in September. The contrast with the steady United States policy rates underlines how different the week's rate decisions looked across countries, even as bond markets moved in the same direction. m:…4048