U.S. Treasury yields held steady on Wednesday as investors considered what could be ahead for monetary policy, especially when interest rates may be cut.
At 4:19 a.m. ET, the yield on the 10-year Treasury was up by less than one basis point to 4.0999%. The 2-year Treasury yield was last at 4.4058% after falling by less than one basis point.
Yields and prices move in opposite directions. One basis point equals 0.1%.
Uncertainty about the outlook for monetary policy has been widespread, prompting investors to assess the potential timetable for interest rate cuts.
That comes as comments from Federal Reserve Chairman Jerome Powell suggested that rate cuts may not take place until later than many investors had been expecting. Some had been hoping for the first rate cut to take place at the Fed’s next meeting in March, though Powell said this would be unlikely.
He also indicated that central bank policymakers were looking for further evidence from data that the economy is easing, and would be cautious when it comes to making decisions around interest rates.
Powell’s comments not only led investors to believe rates may stay at their current level for longer than anticipated, but also that there may be fewer rate cuts than expected this year. This fueled concerns about the impact of elevated rates on the economy and if they could lead to a recession in the U.S.
Further Fed officials are due to make remarks on Wednesday, and the latest import and export figures are due.
