Traders on the floor of the New York Stock Exchange
Source: The New York Stock Exchange
U.S. Treasury yields edged higher Monday ahead of a highly anticipated meeting of the Federal Reserve’s Federal Open Market Committee.
The yield on the 10-year Treasury was trading around 3.559% at 1:08 p.m. ET, up almost 11 basis points. The 2-year Treasury yield was up 7 basis points at 4.135%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
The Fed is expected to announce a 25-basis point interest rate hike Wednesday at the conclusion of its meeting. Investors are particularly interested in any guidance on how long rates will remain elevated and when rate cuts could get underway.
It follows GDP figures last week indicating slower-than-expected economic growth in the first quarter. The personal consumption expenditure index, meanwhile — one of the Federal Reserve’s preferred inflation gauges — rose on the previous quarter, coming in at 4.2%.
The ongoing fight amongst U.S. lawmakers regarding the nation’s debt limit has also put pressure on short-term yields.
“Risks related to the debt ceiling reach elevated levels in early June, based on Treasury bill yields, suggesting market volatility could begin to build in the second half of May,” said Bank of America Securities’ credit strategist Yuri Seliger. “Our interest rate strategists point out that the US Treasury could lose confidence in its ability to meet all obligations by mid-June.”
