NEW YORK — US Treasury yields sank on Friday after Federal Reserve Chair Jerome Powell alluded to a possible interest rate cut at the central bank’s policy meeting next month, but did not fully commit to the move.
The Fed’s top official acknowledged on Friday the persistent risk of higher inflation along with the growing challenges to the jobs market.
“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Powell told an audience of international economists and policymakers at the Fed’s annual Jackson Hole conferencein Wyoming.
“This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly,” he said, before touching on inflation risks.
He added that the “shifting balance of risks may warrant adjusting our policy stance.”
In afternoon trading, the US two-year yield, which is tied to the Fed’s monetary policy, was down 10.2 basis points (bps) to 3.69 percent, on track for its largest daily fall since August 1. The yield earlier fell to more than a one-week low of 3.675 percent.
The benchmark 10-year yield also fell to a one-week low and was last down 7.2 bps to 4.259 percent, its biggest one-day decline in three weeks.
