US Treasury yields eased early Thursday after the Federal Reserve left its benchmark rate unchanged at 3.75%–4.00%, but persistent inflation and stronger growth kept market expectations tilted toward another hike. The 10-year Treasury yield slipped 2 basis points to 5.016%, the 2-year yield fell 4 basis points to 4.693%, and the 30-year yield declined 2 basis points to 5.342%.
The FOMC voted 10-2 to hold rates, with Fed Chair Kevin Warsh saying the committee will deliver price stability. Warsh also said he does not believe in forward guidance absent a crisis, while noting financial and credit conditions had begun to tighten for some businesses and households. CME FedWatch data showed an 85.7% chance of a 25-basis-point rate increase at the December 9 meeting.
Thursday's data reinforced the hawkish outlook. The Commerce Department reported PCE inflation rose 0.5% month-over-month in September, taking the annual rate to 3.6%, while core PCE increased 0.3% monthly and 3.1% annually. Third-quarter GDP grew at an annualized 3.4%, above the 3.1% forecast and up from 2.2% in the second quarter. Separate Labor Department figures showed initial jobless claims fell by 1,000 to 194,000, near multi-decade lows.
With inflation still well above the Fed's 2% target, the labor market tight and growth resilient, investors are bracing for restrictive policy to persist. That environment typically pressures risk assets, including cryptocurrencies.
