Treasury yields fall after Fed's Waller signals support for no rate hike

Treasury yields moved lower across the curve on Thursday, as traders reacted to remarks by Federal Reserve Governor Christopher Waller saying he's leaning toward keeping interest rates unchanged at the central bank's next policy meeting in two weeks.

The 10-year Treasury note yield, the main benchmark for mortgages, auto loans and credit card debt, fell more than 5 basis points to 4.74%. The longer-dated 30-year Treasury yield, more sensitive to geopolitical events, dropped more than 3 basis points to 5.231%.

The shorter 2-year Treasury note yield, which tends to tracks short-term Federal Reserve interest rate decisions, was more than 7 basis points lower at 4.307%.

One basis point equals 0.01%, or 1/100th of 1%. Yields and prices move inversely to one another.

Federal Reserve Governor Christopher Waller said Thursday he is leaning toward keeping interest rates steady at the central bank's September meeting, provided there are no surprises from upcoming inflation data.

In remarks that appeared to contrast with statements last week from Fed Chairman Kevin Warsh, Waller expressed confidence in the current inflation trends, saying that tariff impacts likely have been muted and higher energy prices haven't had a substantial impact on other parts of the economy.

While he conceded that inflation is "meaningfully above" the Fed's 2% target, he noted that recent trends "suggest we are finally seeing some signs of disinflation."

The decline in yields comes after a relentless march higher over the past month amid mounting concern over the level of debt, inflation and rising global energy prices. On Wednesday, yields touched a multi-year high.

Investors were also looking ahead to the next key reading on the state of the labor market, when August nonfarm payroll numbers are reported Friday.

Before then, the latest ISM services PMI data — which provides a monthly snapshot of U.S. service sector activity — is due Thursday, and is expected to come in at 54.3, up slightly from July's print of 54.1.

Elsewhere, hostilities in the Middle East are also looming over markets, after Iran launched missile and drone strikes against Kuwait, and President Donald Trump said the current flare-up in tensions would not last "too long."

West Texas Intermediate futures for October delivery rose almost 1% to above $91 per barrel, while global oil benchmark Brent crude was last 0.5% higher at $96.

— With additional reporting by CNBC's Jeff Cox