Bonds Yields Report on Wednesday 31, July 2019 | 10-year yield declined after Fed cuts rates, calls reduction a 'midcycle adjustment'
Thomas Franck 3-4 minutes U.S. government debt yields whipsawed on Wednesday after Federal Reserve Chair Jerome Powell said that the central bank’s quarter-point rate cut was simply a mid-cycle “adjustment.” The Fed decided at its two-day July meeting to cut its benchmark overnight lending rate by one quarter point to a target range of 2% to 2.25%. The central bank also said it would stop reducing the size of its balance sheet, which consists of bonds and mortgage-backed securities it purchased following the 2008 financial crisis. Wednesday marked the first cut to the federal funds rate since December 2008. At around 4:04 p.m. ET, the yield on the benchmark 10-year Treasury note , a benchmark for auto loans, mortgages and other lending, settled lower to trade at 2.013%. The 2-year Treasury yield, more sensitive to changes in Fed policy, rose 2 basis points to 1.872%. Bond yields move inversely to prices. “We’re thinking of it essentially as a mid-cycle