Treasuries-US yields decline as Waller comments dent rate hike expectations

Expectations for a hike at the Fed's mid-September meeting retreated after the comments, with markets now pricing in a 50.4% chance for a hike, down from 63.2% in the prior session, according to CME FedWatch.

The yield on the benchmark U.S. 10-year Treasury note fell 3.8 basis points, on track for its biggest fall since August 25, to 4.756%. On Wednesday, the yield on the note hit 4.818%, its highest since November 1, 2023.

The yield on the 30-year bond fell 2.8 basis points to 5.239%. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 5.6 basis points, on pace for its biggest drop since August 13, to 4.33%. The two-year yield had risen to 4.41% on Wednesday, its highest since January 2025.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 42.2 basis points.