U.S. Treasury yields declined on Thursday as investors digested the Federal reserve’s latest policy decision and considered the central bank’s policy guidance.
At 5:25 a.m. ET, the 10-year Treasury yield was trading at 3.4734% after falling by over two basis points. The yield on the 2-year Treasury was down by just below two basis points to 3.963%.
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Yields and prices have an inverted relationship and one basis point equals 0.01%.
Investors considered the latest Federal Reserve interest rate news after the central bank announced that it would hike rates by 25 basis points on Wednesday. That marked the ninth consecutive interest rate increase and was in line with expectations.
During a news conference following the meeting, Fed Chairman Jerome Powell indicated that the central bank’s battle to bring inflation to 2% “has a long way to go and is likely to be bumpy.” He also suggested that rate cuts were unlikely for 2023.
A pause to rate hikes could, however, be on the horizon, a statement published by the Fed alongside the rate announcement hinted, adding that policy decisions would continue to be data-dependent.
That was a shift in tone from Fed officials’ comments earlier this month that had signaled at higher-than-expected interest rates. It led many investors to anticipate a 50 basis point rate hike, but they adjusted their expectations after the recent turmoil in the banking sector raised concerns about the stability of the financial system.
Powell noted that those fears played a role in the Fed’s policy decision.
Elsewhere, the Swiss National Bank announced a 50 basis point rate hike on Thursday and the Bank of England is expected to publish its latest policy decision later in the day.
On the data front, the latest initial weekly jobless claims report as well as final building permit figures and new home sales data for February are due Thursday.
