US Treasury yields drop following Fed’s decision to keep rates unchanged; 10-year note falls to 4.04%. Powell emphasizes job market importance, with July Nonfarm Payrolls report pivotal for future rate decisions. Market participants price in three rate cuts by year-end, as indicated by CME FedWatch Tool. The US 10-year benchmark note coupon sank nine and a half basis points to 4.04% following Fed Chair Jerome Powell’s remarks. US 10-year benchmark note falls 9.5 basis points to 4.
The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar as it makes the US a more attractive place for international investors to park their money.