U.S. Treasury yields fall after tumultuous week

U.S. Treasury yields pulled back Friday as a volatile week, which saw central banks around the world signaled a more aggressive effort to curtail soaring inflation, drew to a close.

The yield on the benchmark 10-year Treasury note was 8 basis points lower at 3.226%, while the yield on the 30-year Treasury bond also dropped 10 basis points to 3.26%. Yields move inversely to prices. The 2-year yield, which is typically more sensitive to monetary policy changes, was flat at 3.172%.

The S&P 500 is on course for sharp weekly losses as investors flee risk assets amid fears that a starker tightening of monetary policy may tip the U.S. economy into recession. Some investors sold stocks and scrambled into bonds on Thursday, driving up Treasury prices and reducing yields.

The Federal Reserve on Wednesday increased its benchmark funds rate by 75 basis points, the largest hike since 1994, with annual U.S. inflation running at a 40-year high of 8.6% in May.

Members of the Federal Open Market Committee reiterated the Fed’s commitment to stabilizing inflation and indicated that a stronger path of rate increases lies ahead. Officials also cut their 2022 economic growth outlook to just 1.7% from 2.8%.

The Swiss National Bank then surprised markets with its first rate hike for 15 years on Thursday, while the Bank of England implemented its fifth consecutive hike.