Treasury yields rose on Wednesday as investors awaited the latest Federal Reserve interest rate decision and guidance from the central bank about the outlook for monetary policy.
At 5:49 a.m. ET, the yield on the 10-year Treasury was over 3 basis points higher at 4.907%. The 2-year Treasury yield was last trading at 5.075% after rising by less than one basis point.
Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.
Investors are widely expecting the Fed to keep interest rates unchanged Wednesday and are looking to guidance issued alongside the rate decision and comments from Fed Chairman Jerome Powell for hints about the policy outlook.
Earlier this month, Powell reiterated the central bank’s commitment to bringing inflation back down to the 2% target, saying that despite some progress, inflation remained too high. The latest consumer price index, which was for September, indicated a 3.7% rise on an annual basis.
Many investors are hoping for signals from the Fed on Wednesday that the rate-hiking cycle which began in early 2022 has reached its end. Various Fed officials have suggested that factors like higher Treasury yields, which tend to tighten financial conditions, thereby easing the economy, mean rates may not have to go any higher.
Markets will also be looking to policymakers for hints about how long interest rates will likely stay elevated.
Also on Wednesday, the Treasury Department will release details about its plans for upcoming government debt auctions, including how big they will be and the duration of the debt in question. On Monday, the Treasury said it would auction off debt worth a total of $776 billion in the last three months of this year.
On the data front, ADP’s employment change report for October and JOLTS job openings data for September are expected Wednesday before the October jobs report is out Friday. Many investors are hoping the data will indicate a cooling of the labor market, which has been a key aim for the Fed.
