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U.S. bond yields fell on Thursday as traders waited for more Federal Reserve comments and absorbed an interest rate hike from the European Central Bank.

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After surging midweek to an 11-year high of near 3.4% on worries that stubborn inflation will encourage the Federal Reserve to continue aggressively raising interest rates, the benchmark 10-year Treasury yield is back trading around 3.22%.

The retreat came despite Fed vice-chair Lael Brainard warning on Wednesday that higher borrowing costs that cool the economy would be necessary “for some time.”

That tone is likely to be reiterated by Fed Chair Jerome Powell when he takes part on Thursday in a discussion on monetary policy hosted by the Cato Institute in Washington, due to start at 9:10 a.m. Eastern.

Jan Nevruzi, U.S. rates strategist at NatWest Markets, said Powell’s comments will be the most important Fed messaging before the central bank enters its blackout period ahead of the September 21st rate decision.

“I think Powell will signal that the decision for September hasn’t been made yet, but the Fed will remain data dependent,” Nevruzi said in a note, adding, “I think their base case is probably 75 basis points, but any bet on either direction is a bet on the strength of the CPI”. The consumer price index report for August is due on Tuesday September 13th.

Markets are pricing in an 80% probability that the Fed will raise interest rates by another 75 basis points to a range of 3.00% to 3.25% after its meeting on September 21st. The central bank is expected to take its Fed funds rate target to 3.9% by April 2023, according to the CME FedWatch tool. Data released on Thursday showed weekly jobless claims fell to the lowest level since late May.

Meanwhile, the E uropean Central Bank on Thursday confirmed the trend among major central banks to tackle inflation even at the risk of tighter monetary policy worsening an economic downturn when it hiked interest rates from zero to 75 basis points.

Surveys of European household and business sentiment are already on the floor amid surging power prices that have pushed the bloc’s inflation rate to a record high of 9.1%.

In its statement the ECB signaled more rate rises are on the way. A press conference with ECB President Christine Lagarde starts at 2:45 p.m. local time, 8:45 am Eastern. Amid choppy trading, the 10-year German bund yield TMBMKDE-10Y, 1.728% was up 1.2 basis points at 1.587% shortly after the decision. The euro was down 0.1% at $0.9999.

U.K. 10-year gilt yields TMBMKGB-10Y, 3.161% fell 1.8 basis points to 3.015% as investors absorbed news that the British government would cap energy prices for households and businesses in a move estimated to cost about $150 billion.

Yields hit an 11-year high of 3.14% on Tuesday as investors worried that most of the then mooted package will be paid for by selling more government bonds. Details of the package’s costings will be revealed by new finance minister Kwasi Karteng later this month.

The more monetary policy sensitive U.K. 2-year gilt yield dipped 2.3 basis points to 2.956% as traders reckoned the capping of power bills would help reduce inflation and allow the Bank of England to be less aggressive in hiking interest rates.

See : Pound, energy stocks and bonds advance as new U.K. prime minister unveils energy package