Treasury yields eased a touch in the bond market after Fed officials released a set of projections showing the median member still expects to cut the federal funds rate twice by the end of 2025. That's the same number as they were projecting three months ago, and it helped calm worries that inflation made possible by President Donald Trump's tariffs and rising oil prices could drive inflation higher and tie the Fed's hands.
Cuts in rates could make mortgages, credit-card payments and other loans cheaper for U.S. households and businesses, which in turn could strengthen the overall economy. But they could also fan inflation higher.
So far, inflation has remained relatively tame, and it's near the Fed's target of 2%. But economists have been saying it may take months to feel the full effects of tariffs. And inflation has already been feeling upward pressure recently from a spurt in prices because of Israel's fighting with Iran.
Oil prices kept swinging up and down on Wednesday. After topping $74 during the morning, the price for a barrel of benchmark U.S. oil dropped below $72 before pulling back to $73.33, up 0.1% from the day before. Brent crude, the international standard, fell 0.2% to $76.32.
Trump said on Wednesday that Iran has reached out to him and that it's not "too late" for Iran to give up its nuclear program, though he also declined to say whether the U.S. military would strike the country.
“I may do it. I may not do it,” he said. “I mean, nobody knows what I’m going to do.”
Oil prices have been yo-yoing for days because of rising and ebbing fears that the conflict could disrupt the global flow of crude. Not only is Iran a major producer of oil, it also sits on the narrow Strait of Hormuz, through which much of the world's crude passes.
On Wall Street, some alternative-energy stocks rose to recover a portion of their sharp losses from the day before, when worries flared about Congress possibly phasing out tax credits for solar and green energy sources. Enphase Energy climbed 4.1% to trim its loss for the week to 20.3%.
Nucor rose 3.5% after the steelmaker said it expects to report growth in profit for all three of its operating groups in the second quarter. It said it benefited from higher selling prices at its sheet and plate mills, among other things.
In the bond market, Treasury yields eased.
The yield on the 10-year Treasury fell to 4.36% from 4.39% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with its overnight interest rate, dropped to 3.90% from 3.94%.
The moves followed a mixed set of reports on the U.S. economy released earlier in the day. One said fewer workers applied for unemployment benefits last week, which could be an indication of fewer layoffs. But a second report said that homebuilders broke ground on fewer homes last month than economists expected. That could be a sign that higher mortgage rates are chilling the industry.
In stock markets abroad, indexes were mixed across Europe and Asia.
Tokyo’s Nikkei 225 rose 0.9%, and Hong Kong’s Hang Seng fell 1.1% for two of the bigger moves.
___
AP Writer Jiang Junzhe contributed.
Credit: AP
Credit: AP
Credit: AP
Credit: AP