U.S. Treasury yields fell on Friday as investors considered the economic outlook, especially regarding inflation, and assessed what could be on the horizon for Federal Reserve monetary policy.
At 4:14 p.m. ET, the yield on the 10-year Treasury was down by more than 5 basis points at 4.253%. This comes after the 10-year yield reached levels last seen in October 2022 on Thursday. The 2-year Treasury yield was down by more than 2 basis points to 4.94%.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
Treasurys
Investors considered the state of the economy and assessed the outlook for Fed interest rate hikes after Wednesday's release of the minutes from the central bank's most recent meeting.
The minutes pointed to the possibility of further rate hikes, with policymakers noting that inflation remains too high and further restrictive monetary policy may be needed to sufficiently ease pressures from higher prices. Any such policy moves would depend on the state of the economy, the minutes indicated.
The Fed has hiked rates 11 times across its last twelve meetings, keeping rates unchanged only at its June 2023 meeting. There are three policy meetings left this year.
Many investors were expecting the Fed's July meeting, at which the central bank raised rates by 25 basis points, to mark the end of the rate-hiking cycle.
Recent economic data has painted a somewhat mixed picture about the effect of the Fed's rate hikes so far, which aimed to cool the economy and ease inflation.
While data suggests that inflationary pressures are easing, other areas of the economy, including the labor market, have shown resilience. Fears about elevated rates dragging the U.S. economy into a recession have not come true so far.
No key economic data is due Friday.