By Sunny Oh

U.S. Treasury yields traded lower on Wednesday after the policy statement from the Federal Reserve's two-day meeting suggested the central bank could cut interest rates later this year.

What are Treasurys doing?

The 10-year Treasury note yield fell 0.5 basis point to 2.053%, while the 2-year note yield, sensitive to shifting expectations for Fed policy, slumped 4.7 basis points to 1.815%. The 30-year bond rate was virtually unchanged at 2.552%. Debt prices move in the opposite direction of yields.

What's driving Treasurys?

The Fed took out the phrase "patience" from its policy statement, adding that uncertainties around the economic outlook had picked up. As expected, the central bank left its federal funds rate unchanged at a range between 2.25% to 2.50%.

The Fed's federal funds interest-rate projections, or the "dot plot", indicated the central bank's rate-setting committee was split between the options of standing pat or easing policy. Seven members forecasted two rate cuts by the end of 2019.

Investors will now await the press conference held by Fed Chairman Jerome Powell. The Fed has been under immense pressure to ease policy even as some say economic data has yet to point to an imminent recession. Short-term rates and fed fund futures have priced in more than one cut before the end of this year.

President Donald Trump has repeatedly (http://www.marketwatch.com/story/trump-on-feds-powell-i-disagree-with-him-entirely-2019-06-16) called for Powell to cut rates, with a report suggesting that the White House contemplated demoting (http://www.marketwatch.com/story/white-house-explored-legality-of-demoting-powell-from-chairman-report-says-2019-06-18) the current Fed Chairman.

Fed decision and Powell press conference:marketwatch calendar

Read: Fed finds itself in a 'tough spot' as 10-year Treasury yield slides to 21-month low (http://www.marketwatch.com/story/fed-finds-itself-in-a-tough-spot-as-10-year-treasury-yield-slides-to-21-month-low-2019-06-18)

What did market participants say?

"You have to see what Powell is saying. He will do what it takes to keep the expansion running," David Norris, head of U.S. credit at TwentyFour Asset Management, told MarketWatch.

"The statement allows [the Fed] to retreat if anything at the G-20 or elsewhere changes the climate between now and end of next month but also recognizes the shift in inflation pressures away from transitory to something more. No patience here, no pause unless events warrant," wrote Jim Vogel, an interest-rate strategist at FTN Financial.

(END) Dow Jones Newswires

June 19, 2019 14:24 ET (18:24 GMT)