6%. Treasury yields also eased in the bond market after the Fed announced its decision to hold interest rates steady, as expected. The Fed hinted that a swift rise since the summer in Treasury yields, and the resulting tumble in stock prices, may be slowing inflation on their own and acting like rate-hike substitutes.NEW YORK — U.S. stocks are rallying Wednesday after the Federal Reserve indicated it may not need to pump the brakes any harder on Wall Street and the economy.
But Powell acknowledged that a recent run higher in longer-term Treasury yields, and the tumble in stock prices that caused, are working on their own to slow the economy and could be starving high inflation of its fuel. If they can do that persistently, he said they could help the Fed whip inflation without requiring more rate hikes.
Since the spring, longer-term Treasury yields have been rising rapidly and catching up with the Fed’s overnight rate. They’ve rallied as the U.S. economy has remained remarkably resilient and the central bank has warned it may keep its short-term rate high for a long time. Last month, it topped 5% to reach its highest level since 2007, up from less than 3.50% during the spring.
One report from ADP suggested hiring accelerated last month by employers outside the government, though not by as much as economists expected. A more comprehensive jobs report from the U.S. government will arrive on Friday.
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