Treasuries gained, with 10-year notes set to halt a two-day decline, as minutes from the Federal Reserve’s July policy meeting showed officials were split on whether an interest-rate hike was needed soon.
Benchmark 10-year yields fell after the minutes showed policy makers were divided on whether the job market would continue to strengthen and saw little risk of a marked pickup in inflation. The release of the minutes comes after New York Fed President William Dudley on Tuesday said a hike was possible as soon as next month.
“Given Dudley’s very hawkish remarks yesterday, the market was positioned for a more hawkish set of minutes,’’ said Gennadiy Goldberg, an interest-rate strategist at TD Securities. “These minutes show a multitude of opinions with no clear voice on when to hike rates, so are less hawkish than the market had been expecting.”
Traders assign roughly coin-flip odds to a Fed hike by year-end, according to futures prices compiled by Bloomberg. After liftoff from near zero in December, officials have twice cut their projections for the path of rates this year, as improving U.S. economic data contrast with signs of slowing growth abroad.