• 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.

US Treasury yields along the short and long end of the curve plummeted late on Wednesday following the Federal Reserve’s decision to hold rates unchanged, as expected. 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 4.04% as market anticipates potential rate cuts

Yields advanced on the release of the monetary policy statement, which was widely perceived as slightly “hawkish.” Nevertheless, all changed once Powell hit the stands.

Powell said that the disinflation process “broadened” and acknowledged that the jobs market would be a crucial piece of the puzzle to reduce borrowing costs, not just inflation.