Treasury yields dropped on Wednesday, with the yield on the 10-year hitting its lowest level since August after the Federal Reserve held rates steady for a third consecutive meeting and set the stage for three cuts in 2024.
The yield on the 10-year Treasury dropped 18 basis points to 4.024%. The last time the 10-year traded below the 4% level was Aug. 10, when it hit 3.957%. The 2-year Treasury yield was last down more than 27 basis points to 4.46%.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
The Fed left interest rates unchanged at the conclusion of its policy meeting and offered more insight into the path ahead, with three cuts expected in 2024. The committee’s “dot plot” penciled in four cuts in 2025 and three in 2026, which would bring the fed funds rate to the 2% to 2.25% range.
Little changed in the Fed’s meeting statement, with traders cheering the the central bank’s forecast of rate easing. The statement, however, acknowledged that inflation “has eased” over the past year.
The central bank also formally lowered its inflation forecast for 2024, seeing a 2.4% rate, down from 2.6%.
Investors are looking ahead to a press conference from Fed Chair Jerome Powell at 2:30 p.m. ET for more clues into future policy decisions.
Earlier in the day, wholesale prices provided another piece of positive inflation news. The producer price index was unchanged for the month, against the Dow Jones estimate for a 0.1% increase. It follows Tuesday’s consumer price index, which increased by 0.1% on a monthly and 3.1% on an annual basis in November.