FX.co ★ US 10-Year Yield Rebounds Further

The yield on the 10-year U.S. Treasury note increased to 4.1% on Thursday, recovering from its five-month low of under 4% observed following the Federal Reserve's rate decision yesterday. Investors continue to evaluate the broader trajectory of global interest rates. As anticipated, the Federal Reserve reduced its key interest rates by 25 basis points and forecasted the possibility of two additional reductions later this year. Nonetheless, Federal Reserve officials also indicated that core inflation may exceed previous estimates while the economic growth and employment forecasts have improved. This context supported yields across the yield curve, further amplified by Chairman Powell's remarks, suggesting that the single rate cut does not necessarily indicate a trend towards further monetary easing. Additionally, a new reduction in unemployment claims and robust results in the Philadelphia Fed's activity index have mitigated concerns of a weakening labor market, thereby exerting additional pressure on Treasury securities. Meanwhile, the Federal Reserve has maintained its quantitative tightening measures, despite the significant drawdown in its overnight reverse repurchase agreements since its last gathering.