U.S. Treasury yields were steady on Wednesday after the Federal Reserve said that it may soon reduce its asset purchase program that has been in place for more than a year.
Shortly after 2 p.m. in New York, the yield on the benchmark 10-year Treasury note was lower by 2.7 basis points at 1.297% and the yield on the 30-year Treasury bond slipped by a similar amount to trade at 1.83%. Yields move inversely to prices.
The Fed said after its September meeting that the economic progress for the U.S. since the depths of the pandemic meant that the central bank may be able to withdraw some of its market support but did not commit to a specific plan.
“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the FOMC’s post-meeting statement said.
Short term Treasury rates were slightly higher after the statement was released. The central bank also downgraded its GDP growth estimate for 2021 to 5.9% from 7% previously.
Investors will also focus on what Chair Jerome Powell says at 2:30 p.m. ET and if he gives more detail about tapering the purchases of bonds and mortgage-backed securities.
Powell has said that slowing down the Fed’s asset purchases should not be seen as a signal about when rate hikes may come. However, a rising number of FOMC members now see the first hike coming in 2022.
“The dots, as we can call it, is the most uncertain part of today’s announcement probably,” Anders Persson, the CIO of fixed income at Nuveen, said on Wednesday morning.
On the economic front, the National Association of Realtors said Wednesday that existing-home sales dipped 2% month over month in August, but the median home price was up almost 15% compared with the same period last year.
Meanwhile, money managers are also digesting news that the House of Representatives has passed legislation that avoid a government shutdown and suspend the debt ceiling until December 2022. The bill now moves to the Senate, however, where Democrats have a much slimmer majority.
