(Bloomberg) -- Short-dated US Treasury yields and the dollar fell after Federal Reserve Chairman Kevin Warsh said officials will have fewer interest-rate setting meetings starting next year.
Two-year yields, which are more sensitive to the Fed’s policy path, fell as much as four basis points to 4.7% on Wednesday after Warsh’s remarks. They’d been higher by as many as five basis points after the central bank left rates steady at their October gathering. Traders were pricing in more than a 90% chance of a quarter-point rate increase at the December gathering.
“The market started moving when he discussed the change in scheduling, interpreting the move as dovish,” said Steve Englander, global head of Group of 10 foreign-exchange research at Standard Chartered Bank.
The US dollar erased its earlier gains to slip after Warsh announced the change in scheduling. Earlier, officials left US borrowing costs at 3.75%-4%, though two policymakers, Governor Lisa Cook and Cleveland Fed President Beth Hammack, dissented in favor of boosting rates by a quarter percentage point. The Fed had boosted rates in September for the first time in three years.
Market participants, however, shifted focus to the logistics of the Fed’s adjusted schedule.