10-, 30-year Treasury yields slip from five-month highs despite Powell's hawkish turn

By Vivien Lou Chen

Long-term Treasury yields dropped from their highest levels since early November on Wednesday amid a round of dip-buying in 2- through 30-year government debt.

What happened

The yield on the 2-year Treasury BX:TMUBMUSD02Y fell 3.1 basis points to 4.930%, from 4.961% on Tuesday.The yield on the 10-year Treasury BX:TMUBMUSD10Y declined 7.3 basis points to 4.584%, from 4.657% on Tuesday.The yield on the 30-year Treasury BX:TMUBMUSD30Y dropped 5.8 basis points to 4.699%, from 4.757% on Tuesday.Tuesday's levels were the highest for the 10- and 30-year yields since Nov. 6 and Nov. 9, respectively.

What drove markets

Buying dominated the trading action on Wednesday, a day after Federal Reserve Chair Jerome Powell confirmed that hotter-than-expected U.S. inflation data means more time is needed before borrowing costs can be lowered.

See also: Why the bond market still holds the cards as Fed walks back its pivot talk

Fed-funds futures traders priced in a 71.1% likelihood that the first quarter-point Fed rate cut will arrive by September, and continued to gravitate toward the prospect of just one or two cuts before year-end, according to the CME FedWatch Tool.

The Fed's Beige Book report, released Wednesday, found steady economic growth occurring in the six weeks that led up to April 8 - but little progress made in reducing inflation.

Separately, Treasury's $13 billion auction of 20-year bonds was met with strong demand in New York afternoon trading.

-Vivien Lou Chen

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04-17-24 1542ET

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