Powell throws cold water on "aggressive rate cuts" to end US Treasury bond rally

US Treasuries suffered their first weekly decline since mid-August after Federal Reserve Chairperson Jerome Powell extinguished market expectations of a "more aggressive rate cut". Yields on US Treasuries rose by between one and three basis points on Friday, continuing the rally that began on Wednesday after the Fed announced a 25-basis point rate cut. The yield on the benchmark 10-year Treasury inched up to 4.12 per cent, its highest level in two weeks. Policymakers will decide future monetary policy "meeting by meeting", Mr. Powell said at a press conference after the policy decision. The statement dampened expectations of a "quick rate cut", although the interest rate swap market remains inclined to believe that the Federal Reserve will cut interest rates twice more this year. Amar Reganti, fixed income strategist at Hartford Funds, said: "In the run-up to the Fed meeting, the bond market was extremely optimistic, both in terms of sentiment and positions. The Fed did cut rates once, and there are likely to be several more in the future, but that clearly does not endorse the market's current expectations." The move came after signs of weakness in the labour market, despite inflation continuing to rise above the Fed's target, and a post-meeting sell-off that ended a sustained rally in Treasury bond prices amid bets that policymakers would cut borrowing costs quickly.