U.S. Treasury yields followed oil prices lower on Friday amid signs of a recovery in crude flows through the Strait of Hormuz and hopes for easing Middle East tensions.
At 4:25 a.m. ET, the 30-year Treasury bond yield was down nearly 2 basis points to 5.188%, and the benchmark 10-year Treasury yield was 1 basis point lower to 4.647%. Meanwhile, the 2-year Treasury note yield hovered just above the flatline at 4.231%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
It follows a sharp rise in Treasury yields after the Fed voted to hold its key interest rate steady at a range of 3.5% to 3.75% in a 9-3 vote on Wednesday.
Investors also parsed through the personal consumption expenditures index, which showed that inflation remained above the Fed’s target, with core PCE, which excludes food and energy, increasing 0.1% monthly and 3.3% annually. Economists polled by Dow Jones were expecting 0.2% and 3.3%, respectively.
Additionally, GDP data showed U.S. growth slowing to 1.5% in the second quarter, missing the Dow Jones consensus estimate of 1.8%.
On the economic data front, the second-quarter employment cost index and Michigan consumer sentiment figures are due later on Friday.
Investors await key jobs data next week, including the JOLTs job openings report for June and the nonfarm payrolls report for July.
“After a hold by the Federal Reserve and a benign PCE deflator, markets no longer see the Fed hiking twice over the coming year. Having said that, September will be a difficult meeting to remain on hold,” Michiel Tukker, senior UK and euro zone rates strategist at ING. “Learning from the reaction to Wednesday’s meeting, we don’t think markets will take it lightly if Fed Chair Kevin Warsh doesn’t show full dedication to fighting inflation.”
“And with little to no forward guidance, markets are left in the dark for many weeks. That leaves longer US rates exposed to another push higher.”