Treasuries rose on Thursday after Federal Reserve Governor Christopher Waller said he would be inclined to leave interest rates unchanged as long as inflation continues to slow. The rally trimmed yields across maturities by three to five basis points, led by the two-year note, which is more sensitive to Fed rate changes than longer-dated tenors.

The two-year yield, which topped 4.40% this week for the first time since January 2025 in anticipation of a Fed rate increase this month, declined as much as seven basis points to 4.30%. The dollar fell as much as 0.5%, losing value against all of its Group of 10 peers.

Waller's comments eased market concerns about imminent tightening, sparking a broad rally in government bonds. Traders pared bets on a September rate hike, shifting focus to upcoming inflation data for further direction.