Treasury Yields Ebb Lower As Investors Shake Off Fed Policy Update

U.S. Treasury yields ebbed lower on Friday morning as investors continued to shake off the Federal Reserve’s heightened inflation expectations and sooner-than-expected rate hike projections.

The yield on the benchmark 10-year Treasury note fell 3.1 basis points to 1.482% around 8:05 a.m. ET. The yield on the 30-year Treasury bond dipped 1.9 basis points to 2.082%. Yields move inversely to prices. One basis point is 0.01%.

Yields drifted lower despite the Fed raising its inflation expectations on Wednesday after its two-day meeting. The Fed also indicated that an interest rate hike could come as soon as 2023, after saying in March that it saw no increases until at least 2024. 

In a note sent to CNBC Thursday, Kleinwort Hambros Chief Investment Officer Fahad Kamal said that based on the Fed’s policy update and Chairman Jerome Powell’s comments to the press on Wednesday, central banks still looked to “remain expansionary for now.”

He sees inflation as transitory in the short term, and expects it to move lower in 2022 as an aging population, supply-chain efficiency and technology-driven productivity gains “exert lasting disinflationary pressures.”

Treasury yields also dipped after an unexpected jump in weekly jobless claims. The Labor Department reported that the number of unemployment insurance claims filed the week ended June 12, rose to 412,000, above an estimate of 360,000.

There are no major data releases, or Treasury auctions, scheduled for Friday.