U.S. Treasury yields rose on Thursday as investors digested the Federal Reserve’s decision to cut interest rates by 50 basis points on Wednesday.
At 2:49 a.m. ET, the yield on 10-year government bonds rose by over one basis point to 3.7018%. The 2-year government bonds The yield was last less than one basis point higher at 3.6127 percent.
Yields and prices are inversely related. One basis point corresponds to 0.01%.
The Federal Reserve decided on Wednesday to cut interest rates by 50 basis points, raising the benchmark rate to 4.75 to 5 percent. The magnitude of the cut was in line with market expectations, which had shifted in recent days from a 25 basis point cut to a larger 50 basis point cut.
This is the Fed’s first rate cut since it began raising rates in March 2022 and marks a shift in its monetary policy approach since then.
“The Committee has become more confident that inflation is moving sustainably toward 2 percent and believes that the risks to achieving its employment and inflation goals are roughly balanced,” the Fed said in a statement after the meeting.
The Federal Open Market Committee also indicated in its “dot plot” that it expects further cuts of 50 basis points by the end of 2024. It also proposed cuts of another full percentage point by the end of 2025 and half a percentage point in 2026.
The Bank of England will announce its latest interest rate decision. It is widely expected to leave rates unchanged after cutting rates for the first time in over four years in August.
Back in the US, investors will also be paying attention to August home sales data and the latest weekly initial jobless claims figures.
