Treasury yields slide as Fed leaves rates unchanged as expected

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Treasury yields fell on Wednesday after the Federal Reserve held rates steady for the second straight time and upgraded its assessment of the economy.

The yield on ten-year government bonds fell by more than 7 basis points to 4.799%, while the yield on two-year government bonds fell by around 9 basis points to 4.985% and below the 5% level.

Yields and prices move in opposite directions. One basis point corresponds to 0.01%.

Treasure chests

US1M US Treasury at 1 month 5.396% +0.002
US3M US Treasury at 3 months 5.469% -0.019
US6M US Treasury at 6 months 5.547% -0.025
US1Y US 1-year Treasury bond 5.40% -0.039
US2Y US 2-year Treasury bond 5.006% -0.065
US10Y US 10-year Treasury bond 4.806% -0.069
US30Y US 30 year treasury 4.98% -0.044

The central bank kept rates unchanged and agreed to keep the key fed funds rate within the range of 5.25%-5.5% reached in July. In a statement after the meeting, the committee noted that gains in the labor market have moderated since earlier this year but remain strong.

In addition to the interest rate decision, investors are looking forward to more comments on Fed Chairman Jerome Powell’s press conference. Many are looking for hints about the policy outlook, how long rates are likely to remain high, or for signals that the rate hike cycle that began in early 2022 has reached its end.

Earlier this month, Powell reiterated the central bank’s pledge to return inflation to the 2% target, saying that despite some progress, inflation remained too high. The last consumer price index, which applied to September, indicated an increase of 3.7% year on year.

Elsewhere, Wall Street assessed new economic data. Industrial activity in the US shrank more than expected in October. The ISM manufacturing index fell to 46.7 last month, down from 49 in September and below the Dow Jones estimate of 49.2.

The Research into vacancies and labor turnover shows that the number of vacancies increased slightly in September. Available positions stood at 9.55 million, above the FactSet estimate of 9.5 million.

The Treasury Department has released details of upcoming bond sales as fears grow over the US government’s debt burden. The plan appeared to be in line with what traders expected, as the Treasury Department plans to auction $112 billion in debt next week.

On the data front, ADP’s employment change report for October showed private sector labor costs increased by 113,000. The data indicated an increase from September, but came in below Dow Jones estimates of 130,000.

— CNBC’s Jeff Cox contributed to this report.

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