Bond Market Update

Short End Pulls Back After Hike

• U.S. Treasuries have had a mixed response to the Fed's 25-basis point rate hike announcement, which was largely expected. The immediate reaction saw a push to fresh highs, but shorter tenors have reversed from their best levels with the 2-yr note giving back its gain. Meanwhile, the long bond trades just below its freshly-set high. In addition to the rate hike announcement, the central bank released its latest economic projections, which showed a slight increase in the median estimate for 2026 GDP to 2.3% from 2.2% in the June estimate. The median estimate for 2026 PCE inflation also increased by ten basis points to 3.7% from 3.6% in June while the median estimate for the fed funds rate for this year increased to 4.1% from 3.8% in the June estimate. Fed Chairman Warsh will address the media at 14:30 ET.
• Yield Check:
  • 2-yr: UNCH at 4.66%
  • 3-yr: -2 bps to 4.74%
  • 5-yr: -3 bps to 4.80%
  • 10-yr: -4 bps to 4.96%
  • 30-yr: -5 bps to 5.31%