US Treasury yields slip as markets digest Powell comments, inflation outlook

  • On Tuesday, Jerome Powell indicated that the central bank could raise interest rates three or more times during 2018 to prevent the economy from overheating.

U.S. government debt yields slipped Wednesday, a day after Federal Reserve Chair Jerome Powell hinted that the central bank could be open to more than three rate hikes in 2018.

The yield on the benchmark 10-year Treasury note was lower at around 2.864 percent at 4:42 p.m. ET, while the yield on the 30-year Treasury bond was lower at 3.128 percent. Bond yields move inversely to prices.

In the previous trading session, government debt yields posted solid gains after the new chair of the Federal Reserve delivered comments on the state of monetary policy and where it was heading in 2018.

On Tuesday, Jerome Powell indicated that the central bank could raise interest rates three or more times during 2018 to prevent the economy from overheating.

"The testimony was important not for what Powell may have said, but because it was the last chance for the Fed to hew to a more 'dovish' or 'continuity' line," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group. "Things need to change given the premise that U.S. inflation is already rising. So in March, the Summary of Economic Projections will indeed shift, in our view, with U.S. inflation projections leading the way up."

During his testimony to Congress, Powell said that policymakers would need to remain on guard when it comes to imbalances in the financial system. He added that individual members of the central bank would be making new projections at its meeting in March.

"This is a time when we need to be alert to buildup of either financial imbalances or to inflation building up," the Fed chief said. "We don't really see those right now."

Symbol
Yield
 
Change
%Change
US 3-MO
---
US 1-YR
---
US 2-YR
---
US 5-YR
---
US 10-YR
---
US 30-YR
---

Gross domestic product grew at a 2.5 percent annual rate in the final three months of 2017, not at the previously reported 2.6 percent pace, the Commerce Department said Wednesday. That was a deceleration from the third quarter's stronger 3.2 percent pace.

Declines in retail sales, home sales, durable goods orders and industrial production appear to have weighed on the economy.

—CNBC's Jeff Cox contributed to this report.