U.S. Treasury yields experienced an uptick on Friday as investors deliberated the future trajectory of interest rates following fresh remarks from Federal Reserve officials.
The yield on the 10-year Treasury rose by 1.4 basis points to reach 4.333%. Concurrently, the 2-year Treasury yield saw an increase of 2.7 basis points, settling at 4.728%. It’s worth noting that yields and prices move inversely, with one basis point representing 0.01%. Investors grappled with the uncertain landscape regarding interest rates, particularly concerning the timing and frequency of potential rate cuts throughout the year.
Federal Reserve Governor Christopher Waller, in remarks made on Thursday, expressed his stance, indicating a need for further evidence suggesting a slowdown in inflation before advocating for interest rate cuts.
“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,” he remarked.
The January readings of both the consumer price index and the producer price index exceeded expectations, fueling concerns over the persistence of inflation beyond initial projections.
Waller’s sentiments were echoed by Federal Reserve Governor Lisa Cook, who anticipates rate reductions this year but underscores the importance of gaining confidence in inflationary trends easing.
These statements align with the overarching sentiment conveyed by the Federal Reserve in recent weeks, as underscored by the minutes from the central bank’s January policy meeting, released earlier this week. The minutes underscored a cautious approach to potential rate cuts, emphasizing a data-dependent decision-making process. Notably, they also indicated that further interest rate hikes were not on the central bankers’ agenda.
