FX.co ★ US 10-Year Yield Steadies as Fed Holds Rates

The yield on the 10-year US Treasury note remained around 4.36% on Thursday, following a period of market volatility earlier this week. The Federal Reserve opted to keep interest rates unchanged, a decision largely anticipated by the market. Chair Jerome Powell emphasized that it is premature to consider reducing rates and provided little clarity on the potential timing for easing monetary policy. As a result, market expectations for rate reductions this year were tempered, with investors now predicting a mere 35 basis points of easing by the end of December. This shift in sentiment coincided with the release of stronger-than-anticipated economic data, which included robust GDP growth for the second quarter and solid private employment statistics. Market focus is now directed toward the upcoming PCE inflation and jobless claims data scheduled for Thursday, along with the July employment report due on Friday, as traders seek further insights into future policy directions. Concurrently, the Treasury maintained its issuance volumes for notes and bonds. However, it announced plans to increase the volume of long-end nominal and TIPS buybacks, effectively limiting the supply of longer-maturity instruments.