The yield on the 10-year US Treasury note reversed earlier declines to trade around 4.46% on Wednesday after the Federal Reserve left interest rates unchanged and signaled the possibility of one rate increase this year. The latest Summary of Economic Projections indicated that nearly half of FOMC participants see at least one additional hike as potentially appropriate in 2024, in line with an upward revision to core inflation and lower projected unemployment.
This shift followed a series of data releases pointing to stronger underlying price pressures in the wake of the conflict in the Middle East and its impact on energy markets, even as labor-market indicators remained solid. Notably, new Chairman Kevin Warsh did not submit his own projections, underscoring his continued resistance to extensive forward guidance from the Fed. He has also advocated for a smaller Federal Reserve balance sheet, with a particular focus on reducing holdings of longer-dated Treasury notes and bonds.
