Traders work on the floor of the New York Stock Exchange during the morning trading on November 07, 2024 in New York City.
Treasury yields slid and prices rose on Wednesday as a key inflation reading met market expectations.
The yield on the 10-year Treasury fell 5.4 basis points to 4.248%, while the 2-year Treasury yield dipped 3.3 basis points to 4.221%.
One basis point equals 0.01% and yields and prices move in opposite directions.
The October personal consumption expenditures price index, a broad measure that the Fed favors as its main inflation gauge, increased 0.2% on the month and 2.3% over the past year. Both were in line with the Dow Jones consensus forecast, although the annual rate was higher than the 2.1% level in September. Excluding food and energy, core inflation increased 0.3% on a monthly basis and 2.8% in one year, also in-line with economists' expectations.
"Overall, there was nothing in the data set that would alter the Fed's thinking regarding a cut/pause next month," Ian Lyngen, BMO's head of U.S. rates, said in a note.
Also reported Wednesday, initial claims for unemployment benefits fell by 2,000 to 213,000 in the week ended Nov. 23, a sign that the U.S. labor market remains tight. Economists polled by Dow Jones expected claims to come in at 215,000.
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A summary of the Fed's meeting minutes from November published Tuesday showed central bank officials confident that inflation is easing and that further interest rate cuts are in store, albeit at a gradual pace.
Money Report
Traders are now pricing in an almost 67% chance that the Fed will cut rates by another quarter point at its next policy meeting in December, with about 33% expecting no change, based on interest rates futures prices, as tracked by the CME Group's FedWatch Tool. The Fed slashed rates a half a percentage point in September and another quarter point earlier this month, lowering its benchmark rate to the current range of 4.50% to 4.75%.
Meanwhile, President-elect Donald Trump's pick of Scott Bessent as Treasury secretary continued to calm investors this week. As a fiscal conservative, Bessent is expected to prioritize market stability and economic growth.
