10-year Treasury yield hovers above 4.5% after Fed signals slower rate cutting cycle

The 10-year U.S. Treasury yield climbed on Thursday after the Federal Reserve signaled fewer rate cuts could be on the horizon next year.

The yield on the 10-year Treasury rose over three basis points to 4.532%, after surpassing 4.5% in the previous session — a perceived marker of increased volatility. The 2-year Treasury yield slipped more than three basis points to 4.325%.

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Yields and prices move inversely to one another. One basis point is equivalent to 0.01%.

The Fed cut interest rates by a quarter-percentage point on Wednesday, in a widely expected third straight reduction.

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Chair Jerome Powell struck a hawkish tone on the outlook for next year, however, raising its inflation forecast and pointing to just two possible rate cuts in the horizon, down from the four signposted in September.

The chances of another rate cut at the Fed's first policy meeting of the year in January slipped to under 10%, according to fed funds futures trading tracked by the CME FedWatch tool.

Investors are now looking ahead on Thursday to fresh reads on the labor and housing markets, as well as final U.S. gross domestic product (GDP) data for the quarter.