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 3 basis points to 4.756%. The longer-dated 30-year Treasury yield, more sensitive to geopolitical events, dropped more than 2 basis points to 5.241%.

The shorter 2-year Treasury note yield, which tends to tracks short-term Federal Reserve interest rate decisions, was more than 5 basis points lower at 4.328%.

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

Although Waller noted that inflation is still “meaningfully above” the Fed’s 2% target, he conveyed confidence in current inflation trends, saying in remarks for a Reuters interview that they “suggest we are finally seeing some signs of disinflation.”

“If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting,” Waller said.

The decline in yields following his comments 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, investors digested the latest ISM services PMI data, which provides a monthly snapshot of U.S. service sector activity. The August reading came in at 55.4, while economists polled by Dow Jones had called for 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

Federal Reserve Governor Christopher Waller on Monday expressed concern about inflation but cautioned against “fighting the last war,” saying the central bank should wait for more data before raising interest rates.

In remarks delivered for a speech in New York, Waller said inflation has expanded beyond the often-cited drivers such as the energy price spike in tariffs. Rather, he cited other factors, particularly artificial intelligence, as root causes for why price increases have held stubbornly above the Fed’s 2% target.

Waller warned that “the desire to avoid past mistakes is often the author of new ones.”

“I am cognizant of the mistake we made in 2021 by not responding sooner to the high inflation we observed, and I am determined to avoid repeating it,” he said.

However, he said that doesn’t reflexively mean raising interest rates to head off the current spate of price increases.

Waller said there is still “a credible case for inflation to begin to fall back” but noted there is an “equally plausible” scenario where inflation could stay elevated or increase, “requiring tighter monetary policy in the near term.”

The policymaker emphasized a deliberate approach as policymakers evaluate the root causes of inflation, which he listed as tariffs implemented in 2025, the rising energy prices associated with fighting in the Middle East – and “spillovers from demand” from artificial intelligence.

“As always, we need to avoid making the mistake of fighting the last war and reacting too soon to tighten inflation, merely because we waited too long last time,” he said. “But we also must avoid repeating the same mistake we made in 2021 and 2022 by waiting too long to respond.”

Waller cited two factors working in the Fed’s favor this time around: a stronger labor market that isn’t a meaningful source of inflation, and well-anchored inflation expectations, at least by market-based measures.

He cautioned, though, against becoming complacent.

“I often hear people say that because inflation expectations are anchored, central bankers do not have to respond to above-target inflation. This view is wrong,” he said. “Sternly staring at inflation until it melts before our withering gaze is not an option.”

Waller’s remarks come the day before the Bureau of Labor Statistics releases its June reading on the consumer price index. Economists surveyed by Dow Jones expect the gauge to show a decline of 0.2% for the month on the all-items headline reading, owing to a sharp drop in oil, and a 0.2% core increase excluding food and energy. On an annual basis, that would take the headline reading down to 3.8%, from 4.2% in May, and core to 2.8%, from 2.9%.

“I would be very pleased to see a lower reading on core inflation, but after its escalation over the first half of this year,…

Federal Reserve Governor Christopher Waller had a “strong interview” for the central bank chair position with President Donald Trump in which the two discussed the labor market in depth and how to jumpstart job creation, according to senior administration officials.

The interview took place in the president’s residence and concluded shortly before Trump addressed the nation on the economy Wednesday night. Treasury Secretary Scott Bessent, chief of staff Susie Wiles and deputy chief of staff Dan Scavino also attended the interview.

Blackrock’s Rick Rieder will be interviewed at Mar-a-Lago for the Fed chair job the last week of the year, the officials said. Fed Governor Michelle Bowman is no longer a candidate for the job, they also said.

National Economic Council Director Kevin Hassett, the favorite for the job in prediction markets, and former Fed Governor Kevin Warsh have previously been interviewed by Trump.

The officials said the conversation about jobs with Waller showed concern and criticism was misplaced that the president was seeking a candidate based on the criteria that the next Fed chair would bow to the whims of the president on rates. They said the president’s interest in the interviews with candidates had been broad-based across a series of economic issues.

Last week, Trump told The Wall Street Journal he thought the Fed Chair should consult with him on rates. “It doesn’t mean—I don’t think he should do exactly what we say,” the President said. “But certainly we’re—I’m a smart voice and should be listened to.”

In the oval office on Thursday, Trump praised Waller in response to a reporter’s question. “I think he’s great. I mean, he’s been a man who has been there a long time, somebody that I was very involved with.” Trump interviewed Waller in 2019 and nominated him to be a Fed governor.

Despite the praise of Waller and the positive description of the interview, there was no indication that he was a favorite candidate for the job. It was only clear that the process of interviews continues with the obvious implication that the president had yet to make a decision. The officials said the interviews are following a “highly organized process.”

In his speech Wednesday, Trump said, “I will soon announce our next chairman of the Federal Reserve, someone who believes in lower interest rates by a lot, and mortgage payments will be coming down even further.”

In an interview on Wednesday with CNBC at the Yale CEO Summit in New York, which took place before he met with the president, Waller said he believed rates could decline by 50 to 100 basis points below the current level because he expects inflation to decline and was concerned about the weak job market.

Waller dissented in…

Federal Reserve Governor Christopher Waller on Monday voiced support for another interest rate cut at the central bank’s December meeting, saying he’s grown concerned over the labor market and the sharp slowdown in hiring.

In an increasingly divided Fed, Waller’s comments put him squarely in the camp of those looking to ease monetary policy to head off further danger in the jobs picture. Others, including multiple regional presidents, have expressed opposition in recent days to more cuts as they view inflation as a persistent economic threat that could be reignited by additional easing.

“I am not worried about inflation accelerating or inflation expectations rising significantly,” Waller said in prepared remarks delivered to a group of economists in London. “My focus is on the labor market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order.”

The rate-setting Federal Open Market Committee next meets Dec. 9-10. Markets are divided over which way the panel will swing following consecutive quarter percentage point, or 25 basis point, cuts at meetings in September and October.

Earlier Monday, Vice Chair Philip Jefferson was noncommittal on the upcoming meeting, saying only that the current economic climate calls for policymakers to “proceed slowly” as it contemplates further cuts. Boston Fed President Susan Collins said Wednesday that she sees a “high bar” for more easing.

Waller specified that he favors another quarter-point move. Governor Stephen Miran, who like Waller is an appointee of President Donald Trump, favored half-point moves at the prior two meetings.

While he has spoken out multiple times in recent months in favor cuts, Waller updated his comments to reflect recent developments. Absent government data during the recently ended shutdown, the policymaker cited a variety of other data points showing weak demand in the labor market and pressure on consumers.

At the same time, he said price data has indicated that tariffs will not have a long-lasting impact on inflation. Cutting rates again will be an exercise in “risk management,” a term Chair Jerome Powell also has been using.

“I worry that restrictive monetary policy is weighing on the economy, especially about how it is affecting lower-and middle-income consumers,” Waller said. “A December cut will provide additional insurance against an acceleration in the weakening of the labor market and move policy toward a more neutral setting.”

Waller rejected claims that the Fed has been “flying blind” on policy as the shutdown suspended almost all official government economic data.

“Despite the government shutdown, we have a…