Treasury yields fell on Friday even after Federal Reserve Chairman Jerome Powell threw cold water on market expectations for aggressive interest rate cuts ahead.
The 10-year Treasury yield dropped more than 13 basis points to 4.213%, while the rate on the 2-year Treasury was 16 basis points lower at 4.553%.
Yields fall when the price of bonds increases. One basis point equals 0.01%.
Treasurys
Powell said the central bank plans on "keeping policy restrictive" until policymakers are convinced that inflation is under control.
"It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease," Powell said in prepared remarks for an audience at Spelman College in Atlanta. "We are prepared to tighten policy further if it becomes appropriate to do so."
Yields tumbled in November because traders increasingly began to believe the Fed was done raising rates and that it may start cutting them in the first half of next year.
The Fed next decides on rates on Dec. 13. Friday is the last day before the blackout period, during which central bank officials cannot speak publicly, before their next meeting. In the meantime, several key data points are due before the policy decision, including November's jobs report and the consumer price index reading.
Markets are pricing in a roughly 98% chance of interest rates being left unchanged in December, according to CME Group's FedWatch tool.
Investors digested inflation data released Thursday in form of the personal consumption expenditures price index for October, which was in line with expectations. The core PCE index, which excludes food and energy prices, reflected an increase of 3.5% on an annual basis. This also marked a slowdown from the previous reading for September, which came in at 3.7%.