U.S. Treasury yields were about flat on Friday as investors awaited comments from Federal Reserve Chairman Jerome Powell.
The yield on the 2-year Treasury was 4 basis points lower at 4.673%. The 10-year Treasury yield was last at 4.322% after declining by around 2 basis points.
Yields fall when the price of bonds increases. One basis point equals 0.01%.
Federal Reserve Chair Jerome Powell is speaking in a fireside chat at 11 a.m. ET at Spelman College. Yields tumbled in November because traders increasingly began to believe the Fed was done raising rates and that it may start cutting them in the first half of next year. Powell could throw some cold water on that notion, maintaining that the central bank had to remain vigilant against inflation. The Fed next decides on rates on Dec. 13.
Investors digested inflation data released Thursday in form of the personal consumption expenditures price index for October, which was in line with expectations. The core PCE index, which excludes food and energy prices, reflected an increase of 3.5% on an annual basis. This also marked a slowdown from the previous reading for September, which came in at 3.7%.
The PCE index is the Fed’s preferred inflation measure and could therefore impact monetary policy decisions. The central bank is set to meet later this month for the last time in 2023.
Markets are pricing in an over 98% chance of interest rates being left unchanged then, according to CME Group’s FedWatch tool. Investors are also hoping to gain some insights into when policymakers believe that interest rates may be cut, and what their expectations for the economy are, especially whether a recession can be avoided.
Fed policymakers have so far been quiet on the topic of interest rate cuts, and Friday is the last day before the blackout period, during which central bank officials cannot speak publicly, before their next meeting. Several key data points including the November jobs report and the consumer price index for November are expected during this time.
On Friday, ISM manufacturing data for November and construction spending figures for October are due.
