Annualized inflation increased to 2.7% in November from 2.6% the previous month, providing further evidence that the economy remains strong despite restrictive monetary policy.

Economic forecasts include the possibility of higher inflation and slower growth that could stall future cuts to the federal fund rates.

The rally left yields lower by at least three basis points, with short maturities — more sensitive to Fed policy changes — falling the most.

The Federal Reserve chair said there are no economic indicators calling for rapid rate cuts. He also addressed Fed independence, the impact of Trump's economic agenda and more.

Two-year yields — more closely tied to the Fed's decisions than longer-maturity debt — reached the highest level since July, and three- to 30-year yields rose at least 10 basis points.

Sens. Elizabeth Warren and John Hickenlooper say recent data suggests there is "no need for restrictive interest rates" and easier monetary policy is necessary to lower housing costs.

Core PCE held steady as service costs rose, but the overall report maintains the central bank's flexibility ahead of next week's Federal Open Market Committee meeting.

Consumer Financial Protection Bureau Director Rohit Chopra said regulators urgently need to implement the Basel III endgame bank capital proposal, suggesting his opposition to the revised rule centers on the process of re-proposal rather than more substantive opposition to suggested revisions.

Europe's top finance ministers are questioning the U.S.'s commitment to the global capital standards. The mistrust could have consequences for international regulatory efforts.

The strong jobs report had traders shredding their aggressive bets for outsized rate cuts at the next policy meeting.

Federal Reserve Gov. Lisa Cook called for weighing the costs and benefits of artificial intelligence, and flagged bias and fraud as areas of concern.

Federal Reserve Gov. Michelle Bowman said a lack of banking experience among regulatory officials has led to unintended consequences. She flagged mergers, fintech partnerships and liquidity proposals as prime examples.

The move signals the end of the Federal Reserve's battle against runaway inflation in the wake of the COVID-19 pandemic. Fed officials expressed divergent views on further action this year.

Federal Reserve Vice Chair for Supervision Michael Barr outlined the changes he and other regulators would like to see to the capital reform plan, including largely excluding banks with less than $250 billion of assets.

Federal Reserve Gov. Christopher Waller said the central bank should lower its target interest rate now and execute a series of cuts in months ahead.

"Fed watchers will be parsing Powell's comments for signs that a 50bp rate cut is on the table for September," noted Lauren Saidel-Baker, an economist with ITR Economics. "However, the notoriously tight-lipped chair is unlikely to confirm this, making a 25bp cut the most likely outcome."

The number of leveraged positions in Treasury futures has risen to an all-time high ahead of the central bank's annual economic symposium in Jackson Hole, Wyoming.

The figures, to be published Wednesday by the Bureau of Labor Statistics, will probably show the consumer price index, and a "core" gauge excluding food and energy, both advanced 0.2% in July.

Many on Wall Street agree that an abrupt end to quantitative tightening, or QT, is unlikely, with policymakers signaling its rolloff of Treasury holdings will finish by year-end.

Policymakers also made several adjustments to the language of a statement released after their two-day meeting in Washington, signaling they are closer to reducing borrowing costs.