Powell Pours Cold Water on "Aggressive Rate Cuts," U.S. Treasury Bonds End Winning Streak

Jinse Finance reported that after Federal Reserve Chairman Powell dampened market expectations for "more aggressive rate cuts," U.S. Treasury bonds experienced their first weekly decline since mid-August. On Friday, yields on U.S. Treasuries across various maturities rose by 1 to 3 basis points, extending the upward momentum that began after the Fed announced a 25 basis point rate cut on Wednesday. The benchmark 10-year U.S. Treasury yield edged up to 4.12%, reaching its highest level in two weeks. At the press conference following the policy decision, Powell stated that policymakers would determine future monetary policy on a "meeting-by-meeting" basis. This statement curbed market expectations for "rapid rate cuts," although the interest rate swap market still tends to believe that the Fed will cut rates two more times this year. Amar Reganti, fixed income strategist at Hartford Funds, said: "Before this Fed meeting, the bond market was extremely optimistic in both sentiment and positioning. The Fed did implement a rate cut, and there may be a few more in the future, but this clearly did not endorse the market's current expectations." Previously, despite inflation remaining above the Fed's target, signs of weakness in the labor market led the market to bet that policymakers would quickly lower borrowing costs, driving U.S. Treasury prices to continue rising; however, the post-meeting sell-off ended this round of gains.