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Treasury Yields Fall as Markets Digest Fed Rate Hike, Look Ahead to PMI Data

The 10-year Treasury note was trading at 3.6946% as of 4:12 a.m. ET, down 1 basis point from its previous close. The note had hit an over 11-year high on Thursday, rising to above 3.71% after gaining almost 20 basis points.

September 23, 2022
3 minutes
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The yield on the benchmark 10-year Treasury fell on Friday as markets adjusted to the Federal Reserve’s interest rate hike. Investors are now focused on flash PMI data for September, which is due to be released later in the day.

The 10-year Treasury note was trading at 3.6946% as of 4:12 a.m. ET, down 1 basis point from its previous close. The note had hit an over 11-year high on Thursday, rising to above 3.71% after gaining almost 20 basis points.

The policy-sensitive 2-year Treasury yield remained near 4.1% after the Federal Reserve raised interest rates. On Thursday, the yield rose as high as 4.163%—a level not seen since October 2007.

As yields rise, prices fall, and vice versa. One basis point is the equivalent of 0.01%.

The September flash PMI data will be released on Friday, providing markets with an early look at the economic state of the manufacturing and services industries for the month. PMI data is used as a key indicator for inflation and recession concerns, as it reflects whether industries are growing or shrinking, as well as supply and demand.

Analysts are expecting the services sector to rebound after contracting sharply in August. Meanwhile, growth in the manufacturing industry is expected to slow down, after picking up close to 2020 levels last month.

Markets are still trying to digest the Federal Reserve's 75 basis point interest rate hike that was announced on Wednesday. Federal Reserve chairman Jerome Powell is set to give a speech with further insights on Friday. Many people are wondering if the central bank is trying to curb inflation with this move.

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