U.S. Treasury yields pushed higher on Thursday as investors studied the Federal Reserve’s second interest rate reduction this year and the outlook for the central bank’s next policy meeting in December.
The benchmark 10-year Treasury yield climbed more than 3 basis points to 4.089%. The 2-year Treasury note yield was also higher by more than 2 basis points to 3.61%. The 30-year bond yield added more than 4 basis points to 4.644%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
Investors weighed the central bank’s latest interest rate cut made Wednesday, which lowered its benchmark fed funds overnight lending rate to a range between 3.75% and 4.00%.
The 10-2 vote in favor of the easier policy came as the Fed copes with an absence of timely economic data due to the four-week-old government shutdown.
In post-meeting statements, Fed Chairman Jerome Powell cast doubt on whether another rate cut will be forthcoming at the Federal Open Market Committee’s next policy meeting in December.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said during his post-meeting news conference. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”
“His statement caught the market a little off guard as it reduced visibility into future rate cuts and highlighted a growing divide among policymakers,” said Adam Turnquist, chief technical strategist at LPL Financial. “For markets, reduced visibility usually means the potential for upside volatility risk, especially in the fixed income market.”
Investors Thursday also reacted to President Donald Trump and Chinese President Xi Jinping’s trade talks in South Korea, which ended with the U.S. reaching a 1-year agreement with China on rare earth supplies and the U.S. lowering fentanyl-linked tariffs on Beijing by half, taking overall duties on Chinese goods down to 47%.
