Treasury yields gained even after the Federal Reserve cut rates for a second time this year as central bank chief Jerome Powell indicated another easing in December was far from certain.
The benchmark 10-year Treasury yield was 7 basis points higher at 4.054%. The 2-year Treasury note yield added 9 basis points to 3.582%. The 30-year bond yield rose 5 basis points to 4.598%.
One basis point equals 0.01% and yields and prices move in opposite directions.
Rates jumped after Powell said the following: “In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
These moves come after the Fed cut the benchmark federal funds rate by a quarter percentage point to a range of 3.75% to 4%. This is the second such cut this year. The CME FedWatch Tool showed traders are continuing to price in a 70% chance of another interest rate cut from the central bank at its December meeting.
The central bank seemed to slightly upgrade its view of the economy in its statement.
“Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments,” the statement read.
Michael Pearce, deputy chief U.S. economist at Oxford Economists, believes that the Federal Reserve may take a breather from its rate-cutting cycle in the near term.
“We expect the Fed to slow the pace of cuts from here. Our view is predicated on a stabilization in labor market conditions, which is a difficult call amid the dearth of official data,” he said. “Our forecast is for the Fed to remain on pause over coming months and deliver three cuts at a quarterly pace in 2026.”