FX.co ★ US 10-Year Treasury Yield Below Recent Highs

The yield on the US 10-year Treasury note rose 2 bps to 4.95% on Friday, partially retracing an 8 bps decline in the previous session, as investors continued to digest the Federal Reserve’s latest policy decision and its implications. As expected, the Fed raised the federal funds rate target range by 25 bps to 3.75%–4.00%, and signaled that at least one additional rate increase is likely this year. Chair Warsh reiterated the Fed’s determination to bring inflation under control, which helped restore some market confidence in the central bank’s policy path and credibility.

Despite Friday’s uptick, the 10-year yield is on track to end the week about 2 bps lower, after briefly exceeding 5.04% ahead of the FOMC announcement—its highest level since 2007—amid concerns about the Fed’s ability to curb inflation and the impact of persistently high oil prices. A third consecutive daily decline in oil prices provided some near-term relief on the inflation front and helped ease pressure on the bond market.