10-Year Treasury Yield Hits 4.256% as Powell Tempers Rate Cut Hopes

Treasury Selloff Snaps 3-Day Decline as 2-Year Yield Adds 7.2 Basis Points

U.S. Treasury yields climbed sharply after Federal Reserve Chair Jerome Powell’s press conference, erasing earlier declines and snapping a three-day positive streak for bond prices. After the Federal Open Market Committee voted to hold rates steady, Powell's subsequent comments that rate cuts are unlikely without more progress on inflation prompted a selloff. The yield on the benchmark 10-year Treasury note rose by 5.5 basis points to 4.256%. The policy-sensitive 2-year Treasury yield, which is closely tied to rate expectations, increased by a more substantial 7.2 basis points to 3.741%.

Markets Price in Just One Rate Cut as S&P 500 Drops 1.4%

The Fed's firm stance reflects persistent inflation concerns, with the central bank's preferred measure running at 2.8% in January, well above its 2% target. This environment, compounded by geopolitical risks pushing Brent crude oil above $109 per barrel, has forced a recalibration of market expectations. According to CME data, investors now largely price in a scenario with only one, or potentially zero, rate cuts this year. The adjustment in monetary policy expectations rippled through equity markets, contributing to a 1.4% decline in the S&P 500 as investors braced for a higher-for-longer interest rate environment.