U.S. Treasury yields were mixed on Wednesday, as investors considered the outlook for monetary policy and financial markets for the coming year.

At 5:10 a.m. ET, the yield on the 10-year Treasury was down by over 1 basis points to 3.872%. The 2-year Treasury yield was flat at 4.293%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

In the last week of trading for 2023, investors considered the path ahead for interest rates and how this could impact the U.S. economy and financial markets.

Earlier this month, the Federal Reserve indicated that interest rates will be cut three times next year, with further reductions expected in 2025 and 2026, as inflation has “eased over the past year.”

The U.S. personal consumption expenditure price index, an inflation gauge closely followed by the Fed, rose just 0.1% on the month in November and was up 3.2% from the same period of 2022, according to data released last week. A Dow Jones survey showed that economists had expected increases of 0.1% and 3.3%, respectively.

Many investors interpreted the data as a sign that the Fed would be able to stick to its monetary policy expectations for next year. Uncertainty remains about when the central bank will start cutting rates.

According to CME Group’s FedWatch tool, markets are expecting rates to be left unchanged at the January Fed meeting, but are pricing in an over 84% chance of rate cuts at the following reunion in March.