Treasuries Close Lower Following Post-Fed Volatility

(RTTNews) - After coming under pressure early in the session on Wednesday, treasuries saw considerable volatility following the Federal Reserve's announcement of its decision to lower interest rates.

Bond prices climbed well off their worst levels and briefly turned positive but pulled back going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.3 basis points to 3.685 percent.

The ten-year yield continued to regain ground after ending Monday's trading at its lowest closing level in over a year.

The lower close by treasuries came even though the Fed decided to lower interest rates for the first time in over four years, aggressively slashing rates by half a percentage point.

With the Fed saying officials have gained greater confidence inflation is moving sustainably toward its 2 percent target, the central bank lowered the target range for the federal funds rate by 50 basis points to 4.75 to 5.00 percent.

The Fed was almost universally expected to cut rates for the first time since March 2020, but there was some debate over whether it would lower rates by 25 or 50 basis points.

The decision to opt for the larger rate cut came as the Fed said the risks to achieving its employment and inflation goals are roughly in balance.

The economic projections provided by Fed officials at the meeting suggested the central bank will cut rates by another 50 basis points by the end of the year.

Fed officials also expect to continue lowering rates next year, with the projections indicating rates will by lower another full percentage point by the end of 2025.

Trading on Thursday may continue to be impacted by reaction to the Fed decision, while traders are also likely to keep an eye on reports on jobless claims, existing home sales and Philadelphia-area manufacturing activity.