Two- through 30-year Treasury yields fell Wednesday morning after data showed wholesale prices flatlined in November and as traders waited for the Federal Reserve’s monetary policy update later in the day.What’s happening
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
fell 5.3 basis points to 4.676% from 4.729% on Tuesday.
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
retreated 4.1 basis points to 4.164% from 4.205% late Tuesday.
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
fell 2.9 basis points to 4.274% from 4.303% Tuesday afternoon.
What’s driving markets All eyes will be on the Fed’s policy decision and interest-rate forecasts, due at 2 p.m. Eastern time, followed a half-hour later by Chairman Jerome Powell’s press conference.Read: Here’s what BlackRock’s Rick Rieder will be watching for after Fed meeting wraps up
The benchmark 10-year Treasury yield has fallen from a 16-year high just above 5% in October, to below 4.2% on hopes that easing inflation will mean the Fed can stop hiking borrowing costs. The headline year-over-year rate of the consumer price index was 3.1% for last month, the lowest level since early 2021. As of Wednesday morning, markets were pricing in a 98% probability that the Fed will leave interest rates unchanged at between 5.25%-5.50% later in the day. Fed funds traders also see a 90.1% chance that rates will be on hold by the subsequent meeting in January, according to the CME FedWatch Tool. With no change in policy expected on Wednesday, there will be a focus on whether Fed officials agree with traders’ projections for the first rate cut to be delivered as early as May. In data released on Wednesday, wholesale prices were unchanged for November, another sign of gradually easing inflation.What strategists are saying “Powell will have to walk a fine line by recognizing the ground gained towards the normalization of the economy while pushing back on the idea of early rate cuts,” said TD Securities strategists Oscar Munoz, Gennadiy Goldberg, and Jayati Bharadwaj. “We expect the chairman to lean against the [Federal Open Market] Committee’s likely dovish guidance at 2 p.m., with guarded hawkishness in the post-meeting presser,” they said in a note.
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The yield on the 2-year Treasury
BX:TMUBMUSD02Y
fell 5.3 basis points to 4.676% from 4.729% on Tuesday.
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
retreated 4.1 basis points to 4.164% from 4.205% late Tuesday.
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
fell 2.9 basis points to 4.274% from 4.303% Tuesday afternoon.
What’s driving markets All eyes will be on the Fed’s policy decision and interest-rate forecasts, due at 2 p.m. Eastern time, followed a half-hour later by Chairman Jerome Powell’s press conference.Read: Here’s what BlackRock’s Rick Rieder will be watching for after Fed meeting wraps up
The benchmark 10-year Treasury yield has fallen from a 16-year high just above 5% in October, to below 4.2% on hopes that easing inflation will mean the Fed can stop hiking borrowing costs. The headline year-over-year rate of the consumer price index was 3.1% for last month, the lowest level since early 2021. As of Wednesday morning, markets were pricing in a 98% probability that the Fed will leave interest rates unchanged at between 5.25%-5.50% later in the day. Fed funds traders also see a 90.1% chance that rates will be on hold by the subsequent meeting in January, according to the CME FedWatch Tool. With no change in policy expected on Wednesday, there will be a focus on whether Fed officials agree with traders’ projections for the first rate cut to be delivered as early as May. In data released on Wednesday, wholesale prices were unchanged for November, another sign of gradually easing inflation.What strategists are saying “Powell will have to walk a fine line by recognizing the ground gained towards the normalization of the economy while pushing back on the idea of early rate cuts,” said TD Securities strategists Oscar Munoz, Gennadiy Goldberg, and Jayati Bharadwaj. “We expect the chairman to lean against the [Federal Open Market] Committee’s likely dovish guidance at 2 p.m., with guarded hawkishness in the post-meeting presser,” they said in a note.
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