U.S. Treasury yields retreated Thursday, with the 10-year Treasury yield falling three basis points to 4.99 percent, ending an eight-day period of rising yields for the benchmark note.
The Federal Reserve raised its benchmark interest rate by 25 basis points. The move steadied the long end of the Treasury curve, with the 10-year holding its decline after the Sept. 16 hike. The two-year Treasury yield, which tracks near-term Fed policy expectations, fell to 4.72 percent.
The split between long and short-end yields reflects investor confidence in Fed Chair Kevin Warsh's inflation-fighting approach. Bond traders interpreted the stability in long-dated Treasuries alongside a smaller decline in short-term yields as a signal that the Fed's tightening cycle is gaining credibility with markets.
The recent gains in Treasuries followed a volatile week for the U.S. bond market. The 10-year yield had climbed to a three-year high at the start of the week, driven by soaring energy prices and hawkish commentary from Federal Reserve officials. Over the past five trading days, the benchmark yield was still up five basis points, indicating an underlying upward trend despite Thursday's decline.
Global bond yields also retreated Thursday. The recovery across international debt markets coincided with the Fed's decision and signals from Warsh about the central bank's commitment to price stability.
Market participants are monitoring the Bank of Japan's decision Friday and upcoming U.S. payroll data for further insights into labor market strength and inflation pressures.
