The 10-year U.S. Treasury yield moved modestly higher on Wednesday morning, as investors geared up for the Federal Reserve’s latest policy decision later in the day.
The yield on the benchmark 10-year Treasury note ticked up to 1.631% at 9:00 a.m. ET. The yield on the 30-year Treasury bond climbed to 2.297%. Yields move inversely to prices.
The Federal Open Market Committee is set to conclude its two-day meeting and share its policy decision at 2 p.m. ET on Wednesday. The central bank is not expected to take any action on monetary policy.
Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET, which investors will be watching closely for any clues on the direction of policy.
Aaron Anderson, senior vice president of research at Fisher Investments, said on Wednesday that while the FOMC had consistently communicated its plans to stick to its current policies for a long time, expectations of higher interest rates and tapering of quantitative easing were on the rise.
“One of the Fed’s biggest challenges is to convince the market it means what it says, especially as base effects and supply-chain bottlenecks cause certain inflation data to tick temporarily higher,” he said.
“The market will be listening closely for any signs the Fed is wavering on its ultra-accommodative policies,” Anderson added.
Fed bank officials, including Powell, have said that they expect a temporary rise in inflation as the U.S. economy accelerates its recovery from the coronavirus pandemic.
An auction will be held Wednesday for $35 billion of 119-day bills.
