U.S. Treasury yields climbed on Wednesday morning, ahead of Federal Reserve’s latest monetary policy decision.
The yield on the benchmark 10-year Treasury note rose 2 basis points to 1.254% at 4:20 a.m. ET. The yield on the 30-year Treasury bond added 2 basis points, advancing to 1.911%. Yields move inversely to prices and 1 basis point equals 0.01 percentage points.
The Fed will issue a statement at 2 p.m. ET on Wednesday, following a two-day meeting of the Federal Open Market Committee. Fed Chairman Jerome Powell will then speak to the media at 2:30 p.m. ET.
Many investors have been focused on when the Fed will start to talk about tightening its ultra-easy monetary policy, amid concerns about rising inflation. However, it looks likely that Fed officials will also express concerns about the rapid spread of the delta variant.
Scott Ruesterholz, a portfolio manager at Insight Investment, said on Wednesday that his firm expected the Fed to announce no change in policy, nor to give any formal guidance on tapering asset purchases.
“Chairman Jay Powell will likely seek to use his press conference to emphasize the Fed’s data dependence as well as its patience while reiterating the view that elevated inflation is transitory,” he said.
Ruesterholz said that while the delta variant is unlikely to see new lockdowns implemented in the U.S. given the level of vaccinations, it may slow economic growth.
“This development likely strengthens the hand of the doves on the FOMC who do not want to remove policy accommodation prematurely,” he explained.
Ruesterholz said his firm continued to expect the Fed’s Jackson Hole summit to be a more “natural point” to start formally discussing tapering.
Auctions are scheduled to be held on Wednesday for $30 billion of 119-day bills and $28 billion of 2-year floating-rate notes.
— CNBC’s Patti Domm contributed to this market report.
