U.S. government debt yields fell Thursday after the Federal Reserve in the prior session failed to signal further rate cuts in 2019, disappointing some investors who'd been hoping for hints at looser monetary policy.
The fixed income moves came after the Fed cut the benchmark overnight lending rate by 25 basis points on Wednesday, its second such move in 2019. However, the central bank dampened market expectations by steering clear of signalling further rate cuts this year.
Following its two-day policy meeting, the central bank said it would lower its benchmark overnight lending rate to a target range of 1.75% to 2%.
The Fed's had trouble keeping the effective federal funds rate — the actual interest banks charge each other overnight — below the upper bound of its target range. The effective federal funds rate rose to 2.3% on Tuesday, breaking above the range for the first time since the global credit crisis more than a decade ago as a confluence of factors including corporate tax day and less liquidity pushed the price of capital up.
On the data front, there will be jobless claims and current account numbers due at 08:30 a.m. ET, and existing home sales due at 10:00 a.m. ET.
The Treasury is set to auction $50 billion in 4-week bills, $40 billion in 8-week bills and $32 billion in 7-year notes.