U.S. Treasury yields experienced a slight uptick on Friday as investors weighed the future trajectory of interest rates following fresh statements from Federal Reserve officials. As of 3:58 a.m. ET, the yield on the 10-year Treasury rose by just over two basis points to 4.3486%, while the 2-year Treasury yield increased by more than two basis points to 4.7413%.
Yields and bond prices move inversely, with each basis point representing a 0.01% change. Investors grappled with the uncertain outlook for interest rates, particularly the timing and frequency of potential cuts throughout the year.
Federal Reserve Governor Christopher Waller remarked on Thursday that he awaited further evidence of a cooldown in inflation before advocating for interest rate reductions. “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole,” Waller stated.
Both the consumer price index and producer price index for January surpassed expectations, sparking concerns over the persistence of inflation. Fed Governor Lisa Cook echoed Waller’s sentiments, expressing the need for greater confidence in inflation moderation despite anticipating rate cuts in the coming months.
Their remarks align with the prevailing sentiment conveyed by the Federal Reserve in recent weeks, as evidenced by the minutes from the central bank’s January policy meeting, released earlier this week. These minutes underscored policymakers’ cautious approach to potential rate cuts, emphasizing a data-dependent decision-making process while also signaling no anticipation of further interest rate hikes.
