10-year Treasury yield eases from recent highs after Fed, Powell reinforce dovish stance
The 10-year U.S. Treasury yield slipped from its earlier highs on Wednesday after the Federal Reserve and Chair Jerome Powell indicated that the central bank expected strong economic growth this year but had no plans to hike its policy interest rate.
The yield on the benchmark 10-year Treasury note was rose slightly on the day to 1.41%. The yield on the 30-year Treasury bond climbed about 2 basis point to 2.411%. Yields move inversely to prices (1 basis point equals 0.01%).
The 10-year hit a high of 1.689% earlier in the session, its highest level since Jan. 24, 2020. The 30-year also hit its highest levels since early last year. The 10-year was trading nearly 1.66% when the Fed announcement was released at 2 p.m., and rates drifted lower as Fed Chair Jerome Powell reinforced a dovish stance for the central bank during his afternoon press conference.
The U.S. dollar fell on Wednesday, after the Federal Reserve said it does not expect to raise interest rates through all of 2023, contrary to market expectations.
The dollar index dropped 0.5% to 91.41 after the Fed comments.
The greenback had reversed its slide in recent sessions on a surge in U.S. Treasury yields due in part to growing expectations that the Fed may tighten rates earlier than thought on forecasts of a faster-than-expected economic recovery.
After the Fed statement, eurodollar futures pared back bets on an interest rate hike by December 2022.
It has priced in so far a 90% chance of tightening by March 2023 and just two hikes for the whole of that year.
The euro rose 0.6% against the dollar to $1.197. Against the yen, the dollar fell 0.1% to 108.85 yen.
Reference: CNBC, Reuters
Thai
Eng