2-year Treasury yield falls below 4.5% as traders weigh a potential slowdown in Fed hikes

The yield on the 10-year Treasury hit a fresh 14-year high on Friday, but bonds cut their losses after a report that some Federal Reserve officials are concerned about overtightening with rate hikes.

The yield on the 2-year Treasury fell more than 11 basis points to 4.491%. Short-term rates are more sensitive to Fed rate hikes.

The 10-year Treasury yield, which hit 4.337% at one point during the session, was flat in midday trading at 4.229%. The 30-year Treasury yield, which is key for mortgage rates, jumped 10 basis points to 4.324%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

The Wall Street Journal reported Friday morning that some Fed officials were growing uneasy with the current pace of rate increases and are starting to worry about the risks of overtightening. Market expectations for a 0.75 percentage point hike in December dipped after the report.

Market concerns about a recession have been growing stronger in recent weeks, as data is reflecting signs of economic contraction, while the Federal Reserve continues to strike a hawkish tone.

Speaking at a panel discussion of business leaders on Thursday, Federal Reserve Governor Lisa Cook said inflation was "too high" and that the central bank would continue to take measures to throttle it "until the job is done."

A 75 basis point rate hike is widely expected to be implemented at the Fed's November meeting. Central bank speakers have said rate hikes will likely continue in 2023.

New York Fed President John Williams is due to make remarks on Friday

The yield on British gilts climbed on Friday, with the 10-year gilt last trading up by around 10 basis points at 4.009%. U.K. bond and currency markets have been on a volatile ride in recent weeks as a result of economic turmoil in the U.K. that cumulated in the resignation of Prime Minister Liz Truss on Thursday.