Treasury yields mixed as Fed holds rates steady. The yield curve steepened today following the Fed’s decision to leave policy rates unchanged and Chair Warsh’s post-meeting press conference, where he emphasized a data-driven approach heading into the December FOMC meeting. The 2-year yield closed 4 bps lower at 4.70%, while the 10-year yield closed 2 bps higher at 5.02%. Meanwhile, equities inched higher as Oracle Corp. surged 11% on an optimistic long-term outlook, with the S&P 500 and NASDAQ closing 0.28% and 0.27% higher, respectively.
Fed leaves rates unchanged, remains committed to battling inflation. In a 10-2 decision today, the FOMC voted to leave policy rates unchanged at 3.75%-4.00% as Fed officials Cook and Hammack dissented in favor of a 25 bp hike. In his press conference, Chair Warsh reaffirmed the Fed’s commitment to bringing inflation down and said the committee has “made clear our readiness to act as circumstances require, and we have shown our willingness to act.” The Fed offered little insight into its next decision, with the post-meeting statement saying, “The accumulation of more information will help the committee determine the policy stance appropriate” to bring inflation back down. Futures markets are currently pricing in an ~84% chance of a rate hike in December. The full FOMC statement with a side-by-side comparison from the prior meeting can be read here.
Fed to reduce frequency of policy decisions. Fed Chair Warsh shared today that the Fed will look to reduce the number of policy decisions made each year from eight to seven starting in 2027. In 2028, the Fed will likely reduce that further to six rate decisions. The FOMC will still hold eight policy meetings each year, but the additional meetings will be dedicated to “broad monetary policy strategy,” focused on longer-term views. Warsh said, “it’s equally important we reserve time and space, as an intellectually diverse group, for strategic deliberations, for thinking anew about big questions, [and] looking out over longer time horizons…” He added that more details are to come regarding the potential changes.