The 10-year Treasury yield was little changed on Friday, capping an eventful week of inflation data and comments from Federal Reserve Chair Jerome Powell suggesting the central bank may not be as aggressive on its rate-cutting campaign going forward.
The yield on the 10-year Treasury note was last flat at 4.42%. The 2-year Treasury note yield last traded at 4.284%, a decline of less than one basis point. Last week, the yields on the 10-year and 2-year ended at 4.31% and roughly 4.25%, respectively.
One basis point equals 0.01%. Bond yields and prices have an inverse relationship.
Fed Chair Powell spoke in Dallas on Thursday, noting that strong U.S. economic growth means the central bank won’t need to rush to cut interest rates. Policymakers dialed back rates by a quarter point last week.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in his speech. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
Boston Fed President Susan Collins underlined that sentiment when she told The Wall Street Journal that a December rate cut wasn’t a “done deal.”
Fed funds futures trading now implies a roughly 62% probability that the Fed will lower interest rates by a quarter point at its December meeting, according to the CME FedWatch Tool. They also reflect a nearly 38% likelihood of central bank policymakers keeping rates steady. The Fed’s current target rate range sits at 4.5%-4.75%.
On Wednesday, October’s consumer price index showed that the inflation rate grew 0.2% for the month, bringing the 12-month rate to 2.6%. But excluding food and energy, core CPI accelerated to 3.3% annually, still far from the Fed’s 2% target. Meanwhile, weekly jobless claims for the week ending Nov. 9 dropped by 4,000 from the previous week to 217,000, signaling a robust economy.
On the economic front, fresh retail sales data showed an increase of 0.4% last month. That is slightly above the 0.3% gain forecast by economists polled by Dow Jones.
