On Thursday, Treasury yields fell slightly after the U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4%. The benchmark 10-year Treasury yield decreased by nearly 2 basis points to 4.988%, while the 30-year yield dropped 1 basis point to 5.341%, and the 2-year note yield fell nearly 3 basis points to 4.702%.
This rate hike was anticipated due to persistent inflation pressures, with Fed Chairman Kevin Warsh emphasizing the need for confidence that inflation is moving towards the Fed's target. The Fed's dot-plot indicated that 16 out of 18 officials expect another rate increase this year, with some suggesting the possibility of two more hikes.
Additionally, the relationship between Fed Chair Warsh and President Trump is under scrutiny, as Trump advocates for lower interest rates. Bob Edwards, chief investment officer at Edwards Asset Management, noted that the bond market's significant movements may be behind us, presenting an opportunity for investors to secure higher yields.
He speculated that any further rate increases would likely occur at the December meeting, avoiding changes before the midterm elections to prevent political implications