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TREASURIES-US yield curve hits steepest in more than two years

BY Reuters | ECONOMIC | 09/18/24 02:45 PM EDT

NEW YORK, Sept 18 (Reuters) - The U.S. Treasury yield curve on Wednesday reached its steepest level since July 2022, after the Federal Reserve cut interest rates by 50 basis points (bps), a larger-than-usual rate reduction as the central bank grappled with a weakening labor market.

The spread between U.S. two- and 10-year yields hit as wide as 10.2 bps and was last at 8.6 bps. A steeper curve suggests more easing is on the way.

The Fed said it has gained greater confidence that inflation is moving sustainably toward its 2% goal and that the risks between prices and employment are roughly in balance.

(Reporting by Gertrude Chavez-Dreyfuss)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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