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 on Wednesday as a key inflation reading met expectations.
The yield on the 10-year Treasury fell more than 3 basis points to 4.27%. The 2-year Treasury yield dipped 2 basis points to 4.23%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
The personal consumption expenditures price index, a broad measure that the Fed prefers as its inflation gauge, increased 0.2% on the month and showed a 12-month inflation rate of 2.3%. Both were in line with the Dow Jones consensus forecast, though the annual rate was higher than the 2.1% level in September.
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"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 on the data front, initial U.S. jobless claims fell by 2,000 to 213,000 for 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.
A summary of the Fed's meeting minutes from November was published on Tuesday, with Fed officials expressing confidence that inflation is easing and that further interest rate cuts will happen at a gradual pace.
Money Report
"In discussing the outlook for monetary policy, participants anticipated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would likely be appropriate to move gradually toward a more neutral stance of policy over time," the minutes said.
Traders are pricing in a 66% chance that the Fed will cut rates by a quarter point in its next December meeting, with 33% expecting no change, according to the CME Group' FedWatch Tool.
Meanwhile, President-elect Donald Trump's pick of Scott Bessent as Treasury secretary, continues to calm investors nerves. As a fiscal conservative, Bessent is expected to prioritize market stability.
