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Business & Finance

Longer-term yields slightly higher after Fed meeting

  • The benchmark 10-year yield was almost unchanged at 0.579%, while the yield on the 30-year note was up 1.9 basis points at 1.2424%.
  • Fed policy makers made comments in line with market expectations in the statement issued at the end of their two-day meeting.
30 Jul, 2020

Longer-term US Treasury yields moved slightly higher on Wednesday after the Federal Reserve renewed its pledge to keep interest rates near zero to help the economy recover from the COVID-19 pandemic.

The benchmark 10-year yield was almost unchanged at 0.579%, while the yield on the 30-year note was up 1.9 basis points at 1.2424%.

Fed policy makers made comments in line with market expectations in the statement issued at the end of their two-day meeting, including repeating a pledge to use the US central bank's "full range of tools" to support the economy.

Evercore ISI macro research analyst Stan Shipley said the Fed appeared to be waiting to judge the full impact of its actions to date, including the extension of credit facilities.

"The Fed has done a lot and they have made sure that capital markets have not collapsed. Whether that's going to be enough to give you stimulus amid the public health crisis, that's an open question," Shipley said.

The stakes for the central bank are high as recent data suggests a nascent economic recovery may have stalled and that declining trends in unemployment may have reversed.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 45 basis points, roughly a basis point higher than Tuesday's close but well off the level of 68 basis points reached on June 5.

The five-year note was down 1.3 basis points at 0.2531%, after touching a record low of 0.252%.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 1.2 basis points at 0.1309% in afternoon trading.

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