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Treasuries jumped after comments by a Federal Reserve official bolstered odds that the central bank will cut interest rates as early as June.

The rally on Thursday was led by short to intermediate-maturity tenors, which are more sensitive than longer-maturity yields to Fed interest-rate changes. Yields on two-year notes declined as much as 8 basis points to just below 3.79%, remaining inside Wednesday’s range. The five-year yield declined nearly 10 basis points below 3.93%.

It marked another day of gains in the $29 trillion Treasury market, which has swung throughout April on President Donald Trump’s evolving trade policies and uncertainty about the Fed’s path.

“The Fed will likely cut in June, especially if on-going trade tariffs slow the US economy further,” said Tom di Galoma, managing director at Mischler Financial Group. “The bottom line is that rates are too high given tariff uncertainty in my view.”

Cleveland Fed President Beth Hammack said on CNBC the Fed could move in June “if we have clear and convincing data” by then and “know which way is the right way to move at that point in time.” She said it was too soon to consider cutting rates at policymakers’ next meeting on May 6-7.

Meanwhile, Trump said his administration was talking with China on trade after Beijing denied the existence of negotiations on a deal and demanded the US revoke all unilateral tariffs.

Swap contracts that aim to predict Fed actions priced in 15 basis points of easing — about 60% of a quarter-point rate cut — for the following meeting on June 17-18, up from around 13 basis points late Wednesday. The contracts priced in a combined 54 basis points of easing by September, four more than previously, around 84 basis points by year-end, or at least three quarter-point cuts.

Fed officials in recent speeches have said they’re prepared hold rates steady until there are clear signs of deterioration in the economy. Some economists have predicted a slowdown will result from the Trump administration’s policies for immigration, trade and regulation.

In US economic data Thursday, weekly jobless claims tallies suggested the labor market remains on solid ground. Speaking later Thursday on Bloomberg Television, Fed Governor Christopher Waller said layoffs linked to tariffs wouldn’t be surprising and could warrant rate cuts, but are unlikely to be visible before mid-year.

Minneapolis Fed President Neel Kashkari is slated to make unscripted remarks after US markets close Thursday, the last policymaker on the calendar before Saturday, the start of the customary communications blackout ahead of the May meeting.

The Treasury rally lowered the yield for the last of this week’s three auctions — $44 billion of seven-year notes. The notes were awarded at 4.123%, slightly higher than their yield moments before the 1 p.m. New York time bidding deadline but still the lowest since September. Primary dealers took a 15.3% share, the biggest since September, as investor demand ebbed.

Expectations for Fed rate cuts this year have waxed and waned since December, when the central bank did the last of three cuts totaling 100 basis points, setting its target band for the US overnight lending rate at 4.25%-5%.

At the start of 2025, forecasts for additional cuts beginning in June were common among Wall Street economists, though several predicted no Fed action during the year. Wagers on at least two cuts by year-end increased in response to weak personal spending and moderating inflation, however traders have declined to fully price in a move before July.

The prospect that the Trump administration’s tariffs agenda will reignite inflation has curbed wagers on earlier rate cuts, even as signs of slowing economic growth abound. Economists at JPMorgan Chase & Co. have predicted a US recession this year.

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