investors digest interest rate outlook

The 10-year Treasury note yield slipped Friday, adding to its sharp downturn this week, as traders brace for possible Federal Reserve rate cuts next year.

The yield on the 10-year Treasury was lower by 2 basis points at 3.905%. It had fallen below the 4% level for the first time since August on Thursday, reaching its lowest level since July. The 2-year Treasury yield was last up by 5.2 basis points at 4.45%, near the closely watched 4.5% level. On Thursday, it hit levels not seen since May.

At the start of the week , the 10-year traded near 4.22%.

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

Treasury yields hit multi-month lows this week as the Fed indicated that it would cut interest rates three times next year at the conclusion of its latest meeting.

In line with market expectations, the Fed left interest rates unchanged for the third time in a row, also boosting hopes among investors that the central bank’s rate-hiking cycle has come to an end.

The Fed also noted that inflation had cooled in the last year, but prices were still somewhat “elevated.” Earlier in the week, the consumer price index and producer price index for November both suggested pressures from rising prices were easing.

However, New York Fed President John Williams on Friday appeared to temper expectations about the near-term future of monetary policy in an interview with CNBC.

“We aren’t really talking about rate cuts right now,” Williams told CNBC’s Steve Liesman.