The 10-year U.S. Treasury yield ticked lower on Thursday as investors considered the outlook for interest rates following commentary from Federal Reserve Chairman Jerome Powell and international inflation updates.
The yield on the 10-year Treasury yield lost nearly 2 basis points to 4.087%. The 2-year Treasury yield also slipped around 5 basis points to 4.508%.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
The European Central Bank once more held its key interest rates steady Thursday. But policymakers lowered forecasts for annual inflation and growth, which can be taken as a positive sign in the fight against rising prices.
Powell on Wednesday reiterated that the central bank would be cautious and consider the risks when it comes to interest rate cuts.
“In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said, speaking before the House Financial Services Committee.
“The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
Powell noted that as the Fed expects rate cuts to begin later this year if the economy develops as anticipated by policymakers, and that rates have likely reached their peak. On Thursday, Powell is slated to appear before the Senate Banking Committee.
His comments broadly echoed the sentiment conveyed by Fed officials in recent weeks, who have given few indications about a potential timeline for rate cuts and indicated their decision-making would be data-dependent.
