US Treasury yields headed lower during Thursday's trading, as investors reassessed the direction of monetary policy in the United States, following the Federal Reserve's decision to keep interest rates unchanged for the sixth time since the beginning of the year, amid anticipation of new economic data that may determine the central bank's direction in the coming period.
The decline in yields came as markets absorbed comments from Federal Reserve Chairman Kevin Warsh, who, following the monetary policy meeting that ended Wednesday, confirmed the possibility of bringing inflation back to the target level of 2% without having to sacrifice economic growth or cause an increase in unemployment rates, indicating the possibility of achieving price stability while maintaining the strength of the US economy.
Markets are awaiting later today the release of the core reading of the Personal Consumption Expenditures (PCE) index for September, which is of particular importance to the Federal Reserve in assessing inflationary pressures.
Forecasts indicate that the annual core inflation rate will accelerate to 3.1%, compared to 3% in August, which could reinforce caution regarding the future of US interest rates.
In the debt market, the yield on two-year Treasury bonds fell by 5.4 basis points to 4.681%, while the yield on benchmark ten-year bonds declined by about 5 basis points to 4.995%.
The yield on long-term bonds maturing in thirty years also fell by 3.3 basis points, settling at 5.328%.
The upcoming inflation data remains a key factor in determining the direction of yields during the coming sessions, as a higher-than-expected reading could lead to renewed pressure on the bond market, while signs of slowing price increases could give investors more room to reassess the likelihood of monetary policy tightening before the end of the year.
