The 10-year Treasury yield fell more than 4 basis points to 5.229% on Thursday, and the 30-year yield dropped more than 5 basis points to 5.602%, retreating from multiyear highs. The pullback followed a solid $22 billion 30-year bond auction and a remark from President Trump on Iran, while Treasury advisor David Zervos said yields have room to fall from current levels.
Yields retreat from multiyear highs
The 10-year Treasury yield fell more than 4 basis points to 5.229% on Thursday, after touching its highest level since 2002 earlier in the week. The 30-year Treasury yield dropped more than 5 basis points to 5.602%, pulling back from a recent 24-year high.
Fed Governor Christopher Waller said more rate hikes are needed to bring inflation down after roughly five and a half years above the central bank's 2% target, though he suggested rates did not need to rise immediately. According to CNBC: "The hikes do not need to come at consecutive meetings", Waller told a Central Bank of Turkey forum in Istanbul. His remarks initially pushed yields higher, but rates gave back those gains after President Donald Trump said the U.S. won't attack Iran until after the November midterm election.
Solid demand at the final auction of the week
Yields also eased after a 30-year Treasury bond auction drew indirect bidders that took 72.3% of the $22 billion sale, above the 10-auction average of 68%. Direct bidders took 20.9% of the sale, just below their average. The auction was the final one of the week, following $58 billion in 3-year notes and $39 billion in 10-year notes sold earlier.
Treasury advisor sees room for yields to fall
Separately, David Zervos, a counselor to Treasury Secretary Scott Bessent, said real yields are historically high and could decline, speaking on CNBC's "Power Lunch." He said the Federal Reserve and other central banks have reacted to short-term rate moves, but the longer-term outlook for rates and inflation has not shifted much. Zervos linked part of the pressure on global yields to corporate spending on artificial intelligence infrastructure and said the increase in rates is not unique to the United States, pointing to similar moves in Germany, France, Italy and Japan.
He added that yields are likely to ease once the energy shock tied to the U.S.-Iran conflict resolves, noting that Brent crude has climbed about 38% since the conflict began.
Sources: US Top News and Analysis, US Top News and Analysis
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