The U.S. 10-year Treasury yield fell Friday as Federal Reserve Chair Jerome Powell signaled at the annual Jackson Hole symposium that the central bank will soon begin cutting interest rates.
The yield on the 10-year Treasury slipped by about 6 basis points to 3.801%. The yield on the 2-year Treasury pulled back almost 10 basis points to 3.913%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
“The time has come for policy to adjust,” the central bank leader said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”
The central bank chair, however, failed to provide insight into when the cuts would take place and the magnitude of the decreases.
Market participants had been looking ahead to Powell’s speech as investors hunt for more insight into the central bank’s policy meeting on the heels of a volatile trading month.
Earlier in the week, minutes from the Fed’s July meeting showed that the “vast majority” of central bank officials “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.”
The news seemed to reassure traders pricing in an interest rate cut at the Fed’s next meeting. Traders largely anticipating a cut at the September gathering, but there’s variance as to how big of a decrease is to be expected, according to the CME Group’s FedWatch Tool.