The Federal Reserve (U.S. central bank) resumed raising interest rates after a three-year pause, reinforcing Wosh’s anti-inflation stance and easing immediate pressure in the Treasury market. The 10-year yield fell to 4.97% on Thursday, ending an eight-session advance, while the two-year yield declined three basis points to 4.70% after reaching a 2024 high on Wednesday. The hike had been largely priced in, but investors were concerned that a surprise pause would undermine confidence in the Fed’s commitment to controlling inflation. The policy move removed that near-term risk, though it did not change expectations that rates will remain elevated. The PCE (personal consumption expenditures price index), the Fed’s preferred inflation gauge, was 3.7% in July, well above the 2% long-term target and near its highest level since 2023. The Fed’s dot plot showed officials still forecasting one more hike this year, while interest-rate swaps priced three additional cumulative increases by mid-2027. Longer-dated Treasuries remain exposed to inflation, fiscal deficits and government bond supply. BNP Paribas strategist Guneet Dhingra recommended shorting 30-year Treasuries, targeting a 5.6% yield. The Thursday decline in yields therefore appeared to be a short-term post-decision recovery rather than a lasting end to pressure on the long end.