U.S. Treasury yields decline as investors assess economy
U.S. Treasury yields fell on Thursday as investors assessed the current state of the U.S. economy. This reaction followed the Federal Reserve's decision to keep interest rates unchanged the day before. The benchmark 10-year Treasury note yield decreased by more than 6 basis points, landing at 4.189%. Meanwhile, the 2-year Treasury yield dropped over 4 basis points to 3.934%. Investors are clearly cautious about economic conditions. On Wednesday, the Federal Open Market Committee decided to maintain its key borrowing rate between 4.25% and 4.5%, a move many expected. The Fed also shared its forecasts, suggesting there could be a total cut of half a percentage point in rates this year. During a press conference, Fed Chair Jerome Powell emphasized that interest rates would remain high if necessary. He noted that if the economy stays strong and inflation does not decline significantly, they could keep their current policies in place for longer. However, he offered flexibility, saying they could ease policies if the labor market weakens or inflation drops faster than expected. These statements come amid growing concerns about a slowing U.S. economy. Investors are worried about the effects of President Donald Trump's trade policies and the tariffs imposed on trade partners, which have raised fears about a potential recession. Powell acknowledged that tariffs are raising inflation expectations, complicating the economic outlook.