By Gertrude Chavez-Dreyfuss
NEW YORK, – U.S. Treasury yields advanced on Wednesday, briefly extending earlier gains, after the Federal Reserve left interest rates steady, as widely expected, and noted that inflation remained elevated and the labor market continued to stabilize.
The Fed held rates unchanged at the 3.50%-3.75% range following a two-day meeting. The Fed, in its statement, said “job gains have remained low,” and also removed language from its prior remarks saying that downside risks to employment had risen.
This suggested that Fed policymakers have become less worried about a deterioration in the labor market.
Both Governor Christopher Waller, a contender to replace Fed Chair Jerome Powell when his term as central bank chief ends in May, and Governor Stephen Miran, on leave from his job as an economic adviser at the White House,
in favor of a quarter-percentage-point rate cut.
Following the Fed decision, the benchmark 10-year yield gained 4.2 basis points to 4.265%. The U.S. 30-year yield also rose, up 4.2 bps at 4.877%.
U.S. two-year yields, which reflect interest rate expectations, were up 2.5 bps at 3.594%. They were at 2.587% before the Fed statement.
“A steadier job market and sticky inflation made the Fed wait to see how previous rate cuts will support U.S. economic growth. The current rate level seems to be within reach of the ‘neutral rate,’ which shores up employment while keeping inflation in check,” said Matthias Scheiber, head of the multi-asset team, at Allspring Global Investments in London.
He added that the big focus will be on the announcement of the new Fed chair, noting that the race is “wide open” though a general expectation is that someone more dovish will succeed Powell.
Following the Fed statement, U.S. rate futures priced in about 46 bps of easing, or fewer than two 25-basis-point rate cuts, for 2026. That was down from about 53 bps two weeks ago.
This article was generated from an automated news agency feed without modifications to text.
