Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC.
Treasury yields fell on Thursday as the Federal Reserve cut interest rates by a quarter point as expected.
The 10-year Treasury yield traded 12 basis points lower at 4.32% after jumping over 14 basis points in the previous session. The yield on the 2-year Treasury fell 7 basis point to 4.21%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
The U.S. central bank on Thursday lowered its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points, to a target range of 4.50%-4.75%. Markets had widely expected the reduction. The Fed moved at a less aggressive pace than September's big half percentage point cut.
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Fed Chair Jerome Powell said the central bank had no concrete decisions going forward, as related to further interest rate reductions. He noted he's not worried about the economy despite one hotter-than-expected inflation report.
"Overall, [we're] feeling good about economic activity," Powell said. "At the same time, we got one inflation report … It wasn't terrible, but it was a little higher than expected."
The benchmark 10-year rate soared in the previous session in reaction to Trump's stunning victory over Vice President Kamala Harris in the presidential election. It's widely believed that Trump will introduce tax cuts and steep tariffs, which could boost economic growth, but also widen the fiscal deficit and reignite inflation.
Money Report
"Both inflation expectations and, in particular, real yields have increased since the Fed began cutting in September," said Bill Zox, portfolio manager at Brandywine Global. "I don't think the Fed will cut in December or January, but the Treasury market will have to deliver that message to the Fed rather than the other way around."
On the data front, initial jobless claims came in roughly in-line with estimates at 221,000. Economists surveyed by Dow Jones were expecting 220K claims for the week ending Nov. 2.
— CNBC's Jeff Cox contributed to this report.
