US 10-Year Yield Rebounds from 5-Month Low

The yield on the 10-year US Treasury note rebounded to 4.07% on Wednesday after briefly falling below the five-month low of 4% threshold as market assessed the rate outlook following the Fed's rate cut.

The FOMC reduced its rates by 25bps, as expected, to restart the cutting cycle that was paused since December.

Median projections by FOMC members indicated that policymakers see two additional rate cuts taking place this year, but robust projections on real growth, unemployment, and upward revisions to core inflation struck some skepticism on the room for sharper cuts next year.

Consistently, Chairman Powell noted that the rate cut did not necessarily anticipate a sharper cutting cycle, lifting yields throughout all maturities.

In the funding markets front, the Fed maintained the pace of its quantitative tightening despite the aggressive drawdown in its overnight reverse repo facility since the last meeting.