US Treasury yields pared earlier declines on Wednesday after Federal Reserve Chair Jerome Powell said inflation in goods prices is expected to accelerate over the summer as the impact of President Donald Trump’s tariffs works its way to US consumers.
Powell also cautioned not to place too much stock in the central bank’s interest rate forecasts, which could change based on incoming data, especially on inflation.
“They don’t appear to be in a hurry at all to consider cutting rates or making … any sort of concerted move,” said Andrew Wells, chief investment officer at SanJac Alpha in Houston.
Powell’s comments came after the US central bank kept rates unchanged as widely expected. Policymakers also maintained expectations for two cuts this year, but a rising minority expects no rate cuts at all.
The yield on benchmark US 10-year notes was last down 0.4 basis points at 4.387 percent. The interest-rate-sensitive 2-year note yield fell 1.5 basis points to 3.935 percent.
The yield curve between two-year and 10-year notes steepened by around two basis points to 45 basis points.
Concerns the United States will join Israel’s war with Iran has boosted demand for safe-haven US debt and helped send yields lower earlier on Wednesday.
Iranian Supreme Leader Ayatollah Ali Khamenei rejected Donald Trump’s demand for unconditional surrender on Wednesday, and the US president said his patience had run out, though he gave no clue as to his next step.
