Yields on 2- through 30-year Treasurys moved lower on Thursday, as investors flocked to government bonds and U.S. stocks buckled under the Federal Reserve’s biggest interest rate hike in 28 years on Wednesday.
What yields are doing
The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.301%
was at 3.325%, down from 3.389% at 3 p.m. Eastern on Wednesday.
The 2-year Treasury note yield
TMUBMUSD02Y,
3.151%
was 3.152%, down from 3.275% Wednesday afternoon.
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
3.350%
was 3.385% versus 3.404% late Wednesday.
What’s driving the market Investors returned to buying government bonds as U.S. stocks broadly sold off on Thursday, a day after the Fed raised its benchmark interest rate by 75 basis points, or three-quarters of a percentage point, in its largest hike since November 1994. The Dow industrials
DJIA,
-2.68%
were down almost 800 points in afternoon trading, while the S&P 500
SPX,
-3.52%
and Nasdaq Composite
COMP,
-4.28%
were each lower by 3.5% and 4.4%, respectively.In his post-meeting press conference on Wednesday, Fed Chairman Jerome Powell said a 75 or 50 basis point move is likely in July, but that 75 basis point moves aren’t likely to become the norm. Powell also said it wasn’t the Fed’s intention to cause a recession, but warned that the path to a so-called soft landing for the economy was becoming more difficult due to factors over which central banks have little control, such as the impact of the war in Ukraine on commodity prices.“Many factors that we don’t control are going to play a very significant role in deciding whether that’s possible or not,” he said.Read: Transcript: Fed Chief Powell’s Postmeeting Press ConferenceSee also: As Fed aggressively raises rates, here are 4 takeaways from Jerome Powell’s press conference In the wake of the Fed’s move, Treasurys and stocks initially rallied on Wednesday, with the Dow Jones Industrial Average
DJIA,
-2.68%
and S&P 500
SPX,
-3.52%
snapping a bruising five-day losing streak. By Thursday, though, equities were back under pressure. Other central banks are also tightening monetary policy to combat inflation. The Swiss National Bank lifted its base rate by a half point, to negative 0.25%, while the Bank of England delivered a quarter-point hike on Thursday. In addition, following an emergency meeting on Wednesday, the European Central Bank said it would use proceeds from expiring bonds it purchased under its former pandemic emergency purchase program, or PEPP, to help keep the yields of so-called peripheral countries from spiraling higher. Read: Why the ECB called an emergency meeting as it wrestles with ‘fragmentation’ risk In U.S. economic data Thursday, construction started on new U.S. homes fell 14.4% in May, the Commerce Department said Thursday. The annual rate of total housing starts fell to 1.55 …