US Treasury futures edged lower in the afternoon session, giving back gains made earlier following comments from Federal Reserve Governor Christopher Waller. The extended decline in oil prices helped to cap the late-session weakness, resulting in only a marginal increase in Treasury yields by the close.
Just after 3:00 PM New York time, yields on intermediate and long-term Treasuries rose by as much as one basis point, with spreads widening slightly. The yield on the benchmark US 10-year Treasury note was trading near 4.475%, in the middle of the day's range.
Short-dated bonds found support after Waller's remarks in Portugal, leading to a steepening of the yield curve. Waller stated that recent inflation risks have diminished, which caused a slight reduction in market pricing for a potential Fed rate hike at the July policy meeting.
By the market close, expectations for a Fed rate hike in July remained around 8 basis points, compared to 9 basis points at Tuesday's close. Expectations for total Fed rate hikes this year were priced at 36 basis points, down from a previous expectation of 38 basis points.
As of 4:57 PM Eastern Time, the yield on the 2-year Treasury note was 4.1744%.
The yield on the 5-year Treasury note was 4.2371%.
The yield on the 10-year Treasury note was 4.4791%.
The yield on the 30-year Treasury bond was 4.9713%.
The spread between the 2-year and 10-year Treasury yields was 30.07 basis points.
The spread between the 5-year and 30-year Treasury yields was 73.15 basis points.
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