Fed Rate Hike Eases Bond Market Tension Ahead of BOJ Decision
The Federal Reserve's first rate hike in over two years has started to calm global bond markets. The 10-year US Treasury yield fell by three basis points to 4.99% on Thursday, snapping an eight-day streak of gains.
Investors weighed Chairman Kevin Warsh's warning that inflation remains 'too high for too long', which added to the uncertainty over how far borrowing costs may rise.
The move came as markets shifted their attention to the Bank of Japan's two-day policy meeting, which is set to conclude on Friday. The BOJ is expected to raise its policy rate to 1.25% from 1%, according to Bloomberg's survey of all BOJ watchers.
US Treasury Secretary Scott Bessent has expressed strong support for Japan's decisive market and monetary steps to address the substantial undervaluation of the yen, according to a readout.
The Fed's preferred inflation gauge stood at 3.7% in July, close to its highest level since 2023 and well above the central bank's 2% target.