The 10-year Treasury yield fluctuated slightly on Thursday as Powell spoke about inflation and the economy, but continued to hover just under the 5% threshold last breached in 2007. Treasury yields have soared recently on expectations that the Fed will keep rates higher for longer, which could slow the economy. The 10-year Treasury yield was close to breaching 5% on Thursday. Whether the Fed raises rates or not depends on the economy’s performance in the coming months.
While he acknowledged steady progress on slowing inflation - and the role of rising yields - he still left additional action from the Fed on the table. “Tight policy is putting downward pressure on economic activity and inflation,” Powell said during a discussion at the Economic Club of New York. But he stopped short of declaring victory, citing the economy’s resilience. Federal Reserve Chair Jerome Powell said Thursday that soaring bond yields could help the Fed slow the economy, further cooling inflation and the possibly signaling the end of rate hikes.
