Treasury yields moved higher on Wednesday after the Federal Reserve kept interest rates unchanged and after the U.S. economy grew at a faster-than-expected pace in the second quarter.
The 10-year Treasury yield rose 4 basis points to 4.368%. The 2-year yield was up 7.2 basis points at 3.947% and the 30-year bond yield added 2.7 basis points to 4.897%. Prices and yields move inversely to one another, and one basis point equals 1/100th of a percent.
The Fed on Wednesday voted to keep the benchmark federal funds rate between 4.25%-4.5%, where it’s been since December and against President Donald Trump’s demands for rate cuts. Wall Street had expected no change.
The Federal Open Market Committee, the group that sets the overnight borrowing rate, voted 9-2 to stay on hold. Governors Michelle Bowman and Christopher Waller both opposed the decision, marking the first time since 1993 that two members dissented from the majority. Bowman and Waller have advocated for the central bank to ease rates to avoid a potential slowdown in the labor market.
Fed Chair Jerome Powell said during his press conference after the meeting that policymakers will wait to make sure tariffs don’t turn into “serious inflation.”
“We have made no decisions about September,” Powell said on Wednesday, referring to the next meeting of the FOMC. “We don’t do that in advance.” Powell said policymakers will review the next two months’ inflation and labor market data, “and all the other information we get as we make our decision.”
Earlier Wednesday, gross domestic product, the sum of goods and services activity across the U.S. economy, jumped at an annual rate of 3% for the April-through-June period, faster than economists’ forecast for a 2.3% increase, according to a Dow Jones survey of Wall Street estimates. The second quarter marked a turnaround from the first quarter, when the economy contracted at a 0.5% rate.
— Jeff Cox contributed to this report.
