The 10-year Treasury yield turned lower Wednesday after the Federal Reserve Chairman Jerome Powell indicated that the central bank won't get even more aggressive in raising rates.
The yield on the benchmark 10-year Treasury note dipped 3 basis points to 2.927%. The yield on the 2-year Treasury fell more than 13 basis points to 2.636%. The 30-year rate rose about 2 basis points 3.024%.
Yields move inversely to prices and 1 basis point is equal to 0.01%.
The central bank raised its benchmark interest rate by half a percentage point on Wednesday. Powell said at a press conference that 50-basis-point increases are under consideration in the next two meetings. However, he said a 75-basis-point hike is not on the table for now.
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"A 75-basis-point increase is not something we're actively considering," Powell said. "I would say I think we have a good chance to have a soft or softish landing, or outcome if you will."
Along with the move higher in rates, the central bank indicated it will begin reducing asset holdings on its $9 trillion balance sheet, starting June 1.
"We didn't get shock and awe, but we did get meaningful tightening and a clear signal that more 50bps hikes are ahead. While a sharper tightening could easily be justified against a backdrop of full employment and undesirably high inflation, the Fed appears to have prioritized growth over inflation and easing the economy into, ideally, a soft landing," said Ronald Temple, co-head of multi-asset and head of U.S. equity at Lazard Asset Management.
"The key data to watch going forward will be shelter costs, job growth, and wage increases, to ascertain whether even stronger actions are warranted."
The Fed had been buying bonds to keep interest rates low and money flowing through the economy, but the surge in prices has necessitated a dramatic rethink in monetary policy.
The 10-year rate crossed the 3% mark on Monday, its highest point since late 2018, and also traded above that level again on Wednesday morning.
The private payrolls report from ADP showed an increase of 247,000 for April, well below the 390,000 Dow Jones estimate. The full Labor Department payrolls report for April is due out Friday.
ISM's non-manufacturing survey for April showed slower expansion month over month, falling to 57.1 from 58.3.
The Russia-Ukraine war also remains a focus for investors, with the European Union having announced plans to further sanction Russian oil imports on Wednesday.
President Joe Biden on Tuesday pressed Congress to pass his massive $33 billion Ukraine aid package during a visit to a Lockheed Martin plant in Alabama that manufactures Javelin anti-tank missiles.
— CNBC's Holly Ellyatt contributed to this market report.