Treasuries Rise as Fed’s Waller Signals Potential Rate Pause
U.S. Treasuries rose on Thursday after Federal Reserve Governor Christopher Waller indicated he would support keeping interest rates unchanged if inflation continues to slow toward the central bank's 2% target. His comments eased market expectations for an imminent rate hike, leading to a decline in Treasury yields across maturities by three to five basis points. Waller’s remarks contrasted with his earlier hawkish stance and previous dissents from Fed decisions to hold rates steady. The two-year yield dropped as much as seven basis points following the comments. Market-implied expectations for rate increases also softened, pricing in only half a quarter-point hike at the upcoming September 16 policy meeting. The dollar weakened against all Group of Ten currencies amid reduced tightening expectations. However, bond-market gains may be limited when U.S. markets reopen after Labor Day due to an anticipated surge in Treasury and corporate debt supply.
Topics: Federal Reserve policy inflation progress Treasury yields