Treasury yields were slightly lower in the early hours of Thursday, as markets digested the Federal Reserve’s 50 basis point rate hike and signals that it will continue lifting rates to rein in inflation.
The yield on the benchmark 10-year Treasury note was down by around 2 basis points at 3.4790%, while the yield on the 30-year Treasury bond slipped by a similar amount to 3.5170%. The 2-year yield was also lower at 4.2216%. Yields move inversely to prices.
The Fed’s hike on Wednesday marked a slowdown from the previous four increases of 75 basis points. The central bank indicated that rates will remain higher throughout 2023, with cuts unlikely until 2024. It also projected that the “terminal rate” will rise to 5.1% before the end of the hiking cycle.
Seema Shah, chief global strategist at Principal Global Investors, said Tuesday’s promising inflation reading did not seem to have swayed the Fed over its monetary tightening trajectory. She also suggested that Wednesday’s announcement should mark the “death knell” for a recent rally in risk assets.