Waller's Comments Dampen Rate Hike Expectations

U.S. Treasury yields declined on Thursday after Federal Reserve Governor Christopher Waller's comments dampened expectations of a rate hike at the central bank's next policy meeting.

Waller stated that if data confirms cooling inflation pressures, he would be inclined to keep interest rates steady. This reduced the likelihood of a September Fed hike, with markets now pricing in a 50.4% chance, down from 63.2% previously.

The yield on the benchmark U.S. 10-year Treasury note fell by 3.8 basis points, its biggest drop since August 25, to 4.756%. The two-year U.S. Treasury yield also decreased by 5.6 basis points, on pace for its largest decline since August 13, to 4.33%.

Waller's comments were made at a Reuters NEXT Newsmaker event in Washington, where he emphasized the importance of patience and monitoring price pressures before making any decisions on rate policy.