Treasury yields fell on Thursday as traders digested comments from US Federal Reserve Chairman Jerome Powell on interest rate policy plans and priced in key economic data.
The return of the benchmark index 10-year cash flow fell to 3.603%, losing 10 basis points. The Cash 2 years the yield was last at 4.326% after falling more than 4 basis points.
Yield and prices have an inverse relationship and one basis point equals 0.01%.
Markets weighed the prospects for future interest rate hikes after Powell said on Wednesday that the pace of rate hikes could be slowed as early as December.
“It makes sense to moderate the pace of our rate hikes as we approach the level of restraint that will be sufficient to bring inflation down,” he explained at an event hosted by the Brookings Institution.
His tone echoed that of other Fed speakers, who have indicated in recent weeks that rates will continue to rise, but likely in smaller increments. The central bank has implemented four consecutive 75 basis point rate hikes so far this year, and traders now expect a 50 basis point increase from its December meeting.
On Thursday, traders will have new information on how high interest rates and inflation are affecting consumers as personal spending and income figures for October are released.
The release of the ISM Purchasing Managers’ Index, which indicates whether factory activity is growing or contracting, will provide further insight into the state of the US economy as a whole. Last month’s figures reflect the weakest growth in activity since mid-2020.
