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Ten-year Treasury yields fall as markets process Fed rate hike

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The benchmark 10-year Treasury yield fell on Friday as markets adjusted to the Federal Reserve’s rate hike and turned their attention to flash PMI (Purchasing Managers’ Index) data for September, which will be released later in the day.

The 10-year treasury note last traded at 3.6946%, down 1 basis point from 4:12 am ET. It had hit an 11-year high on Thursday, rising above 3.71% after gaining nearly 20 basis points.

The policy-sensitive 2 year treasury continued to hover around 4.1% after rising following the Federal Reserve’s rate hike. By Thursday, it had risen to 4.163% – a level not seen since October 2007.

Yields and prices move in opposite directions. One basis point corresponds to 0.01%.

September flash PMI data is expected to be released on Friday, providing markets with preliminary insight into the economic condition of the manufacturing and services sectors for the month. PMI data is used as a key indicator of inflation and recession concerns, as it indicates whether industries are growing or contracting, as well as supply and demand.

Analysts expect the services sector to rise after a sharp contraction in August. Meanwhile, growth in the manufacturing sector is expected to decline, after a slowdown of nearly 2020 in the past month.

Markets are also digesting the Federal Reserve’s 75 basis point rate hike that was announced on Wednesday as the central bank tries to curb inflation. Federal Reserve Chairman Jerome Powell will give a speech on Friday with further insights.

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