10-year Treasury yield falls as markets digest Fed rate hike

The benchmark 10-year Treasury yield fell on Friday as markets adjusted for the US Federal Reserve’s rate hike and attention turned to flash September Purchasing Managers’ Index (PMI) data, which was later in the day are to be published.

The 10-year Treasury bond was last trading at 3.6946%, down 1 basis point at 4:12 am ET. It had hit an over 11-year high on Thursday, rising to over 3.71% after gaining almost 20 basis points.

The policy-sensitive 2-year Treasuries continued to move up 4.1% after rising on the back of the US Federal Reserve’s rate hike. On Thursday it had risen as high as 4.163% – a level not seen since October 2007.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Flash September PMI data is scheduled for release on Friday and will give the markets a preliminary insight into the economic health of the manufacturing and services sectors for the month. PMI data is used as a key indicator of inflation and recession concerns as it reflects whether industries are growing or contracting, as well as supply and demand.

Analysts expect the services sector to rise slightly after a sharp decline in August. Meanwhile, manufacturing growth is expected to slow after slowing to 2020 levels last month.

Markets are also digesting the Federal Reserve’s 75 basis point rate hike announced on Wednesday as the central bank tries to rein in inflation. Federal Reserve Chair Jerome Powell is set to deliver a speech with further insights on Friday.

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