BlockBeats News, September 19th, Federal Reserve Chairman Powell dashed market expectations of “more aggressive rate cuts,” and U.S. Treasuries saw their first weekly decline since mid-August. On Friday, yields on U.S. Treasuries across maturities rose by 1 to 3 basis points, continuing the uptrend that began after the Fed announced a 25 basis point rate cut on Wednesday. The yield on the 10-year U.S. Treasury, a benchmark, edged up to 4.12%, reaching its highest level in two weeks. Powell stated in the post-decision press conference that policymakers will decide future monetary policy in a “meeting-by-meeting” manner. This statement dampened market expectations of a “rapid rate cut,” although the interest rate swap market still tends to believe that the Fed will cut rates twice more this year.
Hartford Funds fixed income strategist Amar Reganti said, “Ahead of this Fed meeting, the bond market was extremely optimistic in both sentiment and positioning. The Fed did cut rates once and may do so several more times in the future, but this clearly did not validate the market’s current expectations.” Previously, despite the inflation rate persistently exceeding the Fed’s target, signs of weakness in the labor market led the market to bet that policymakers would rapidly reduce borrowing costs, driving U.S. Treasury prices higher. However, the post-meeting sell-off brought an end to this rally. (FXStreet)
