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2-year Treasury yield falls on Friday as data shows slowing inflation

Angela Weiss | AFP | Getty Images

U.S. Treasury yields declined on Friday as the Federal Reserve's preferred inflation gauge showed that price increases cooled in June.

The 2-year Treasury yield was down by more than 6 basis points to 4.874%. The yield on the 10-year Treasury was trading at 3.959% after falling by 5 basis points.

Yields and prices move in opposite directions. One basis point equals 0.01%.

The Commerce Department reported Friday that the personal consumer expenditures index rose just 0.2% month over month when excluding volatile food and energy prices. That was in line with economist estimates, according to Dow Jones.

The so-called core PCE rose 4.1% year over year, a tick below expectations.

That comes after the Fed's latest meeting, which saw policymakers hike interest rates by 25 basis points, in line with market expectations, as the central bank continues its efforts to ease inflation and cool the economy.

In a press conference after the interest rate decision, Fed Chair Jerome Powell noted that inflationary pressures had eased, but there was still "a long way to go" before the Fed's 2% inflation target was reached.

Powell also said that future monetary policy moves would depend on upcoming data, and decisions would be made on a meeting-by-meeting basis.

Elsewhere, the Bank of Japan maintained negative interest rates, but loosened its yield curve control policy to allow for what it described as "greater flexibility." The move was seen by some analysts as a hint that the central bank may eventually shift its monetary policy to a tighter approach.

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