Treasury yields moved slightly higher on Wednesday after U.S. Treasury Secretary Scott Bessent eased market jitters over instability at the top of the Federal Reserve, turning attention back to the interest rate outlook.
The benchmark 10-year Treasury yield was trading 5 basis points higher at 4.386%, while the 2-year yield rose more than 5 basis points to 3.884%. The 30-year yield added 4 basis points to 4.943%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
Bessent on Tuesday said that Fed Chair Jerome Powell does not need to resign, but reiterated calls for a review of the institution. That same day, U.S. President Donald Trump suggested he no longer plans to seek to oust Powell — telling reporters “he’s going to be out pretty soon anyway — calming fears of a complex legal, economic and market fallout.
Focus now turns to the Fed’s July 29-30 monetary policy meeting, during which the central bank is widely expected to hold interest rates on the back of economic uncertainty, despite the president’s repeated urging for a cut. U.S. inflation rose to an annual rate of 2.7% in June, up from 2.4% in May.
Powell declined to give more details on the outlook during Fed conference remarks on Tuesday, instead focusing on banking regulation.
“Bond yields are moving on Fed talk. A lot of political pressure is being put on Powell and the FOMC to lower rates,” said David Aspell, co-chief investment officer at Mount Lucas Management. “Independence and credibility are hard-earned and incredibly important. If the exit were messy, we’d likely see steeper curves.”
Global stock markets were meanwhile boosted Wednesday by the announcement of a U.S. trade agreement with Japan setting tariffs at 15%, fueling hopes of deals with other trade partners including the European Union.
Traders are looking ahead to weekly initial jobless claims and new home sales figures out Thursday. On Wednesday, existing home sales declined more than expected in June.
