NEW YORK- US Treasury yields were flat to slightly lower on Wednesday, after posting gains earlier, partly weighed down by comments from Atlanta Federal Reserve President Raphael Bostic, who urged the Fed to wait longer for the impact of previous interest rate hikes to work through the economy before raising rates again.
A strong auction of US 20-year bonds on Wednesday also lifted prices of Treasuries, pushing their yields lower.
Bostic’s dovish remarks, which came after the auction further spurred modest buying.
“If we simply press on with additional rate hikes, we could needlessly drain too much momentum from the economy,” Bostic said.
“I think we are in a place where we should let the hard work the (Federal Open Market) Committee has already done work its way through the economy and see if it continues to bring inflation closer to our goal.”
Bostic was the first Fed official since last week’s policy meeting to say a July hike, as markets have expected, may be too soon.
He also said the benchmark rate should stay unchanged for the rest of this year, adding that he did not envision a rate cut until at least late 2024.
“The latest dot plot calls for two more rate hikes,” Mike Reynolds, vice president of investment strategy at Glenmede told the Reuters Global Markets Forum. “The market seems to be buying into the need for one more before year-end, but seems to be skeptical of the second.”
