US Treasury yields fell on Wednesday as investors awaited the Federal Reserve’s latest interest rate decision and guidance on central bank monetary policy.
At 5:48 am ET, the 10-year Treasury yield was down 2 basis points to 3.587%. The 2-year Treasury bond traded at 4.134% after falling about 4 basis points.
Yields and prices move in opposite directions. One basis point equals 0.01%.
treasuries
| TICKER | COMPANY | YIELD | CHANGE | %CHANGE |
|---|---|---|---|---|
| US1M | 1 Month US Treasury Notes | 4,068% | +0.096 | 0.00% |
| US3M | 3 Month US Treasury Notes | 4.87% | +0.117 | 0.00% |
| US6M | 6-month US Treasury Notes | 4.98% | +0.056 | 0.00% |
| US1Y | 1-year US government bonds | 4.726% | +0.068 | 0.00% |
| US2Y | 2-year US government bonds | 4.159% | -0.018 | 0.00% |
| US10Y | 10-year US government bonds | 3.594% | -0.012 | 0.00% |
| US30Y | 30-year US government bonds | 3.738% | +0.002 | 0.00% |
Investors braced for the Fed’s next interest rate decision, which is expected to be announced after the conclusion of the central bank’s monetary policy meeting on Wednesday.
A rise of 25 basis points is widely expected. That would be the ninth straight rate hike and second straight quarter-point hike after a series of larger rate hikes throughout 2022.
Just a few weeks ago, many investors believed that Fed officials would pick up the pace of rate hikes again and announce a 50 basis point hike. Fed Chair Jerome Powell had hinted that rates would be higher than previously expected, noting that the Fed’s efforts to cool the economy are still ongoing.
However, the recent turmoil in the banking sector following the failures of Silicon Valley Bank and Signature Bank and UBS’s takeover of Credit Suisse changed investor sentiment. Many now believe that the Fed will favor stability and are therefore opting for a smaller rate hike.
Investors will also be looking for guidance on future policy plans, particularly in relation to rate cuts and when to do so.
Meanwhile, worries about the banking sector appear to be easing slightly as the SPDR Regional Banking ETF (KRE) closed higher for the second straight day on Tuesday.