U.S. Treasury yields climbed higher Thursday as investors digested the Federal Reserve’s decision to cut interest rates by 50 basis points on Wednesday.
At 3:56 p.m. ET, the yield on the 10-year Treasury was up nearly 4 basis points at 3.726%. The 2-year Treasury yield was around one basis point lower at 3.594%.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
The Federal Reserve on Wednesday delivered a 50 basis point interest rate reduction, bringing the federal funds rate to 4.75% to 5.00%. The size of the cut was in line with market expectations, which had shifted from expecting a 25 basis point cut to a bigger 50 basis point cut in recent days.
It is the first rate cut from the Fed since it began hiking in March 2022, marking a shift in its monetary policy approach since then.
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Fed’s postmeeting statement said.
Weekly jobless claims fell by 12,000 to 219,000, which was far below estimates, according to labor market data released Thursday. The better-than-expected figure helped reassure investors the economy is headed toward a soft landing.
The central bank’s Federal Open Market Committee also indicated through its “dot plot” that it is anticipating another 50 basis point worth of cuts by the end of 2024. It also suggested another full percentage point in cuts by the end of 2025, and a half point in 2026.
Elsewhere, the Bank of England announced on Thursday it would hold interest rates steady after cutting rates for the first time in more than four years in August. The central bank cited “elevated” services inflation and a need for gradual easing of monetary policy.
