U.S. Treasury yields retreated on Wednesday as investors waited to hear from Federal Reserve Chairman Jerome Powell.
At around midday in New York, the yield on the benchmark 10-year Treasury note was lower by 1 basis point to 1.34% and the yield on the 30-year Treasury bond slipped by a similar amount to trade at 1.844%. Yields move inversely to prices.
U.S. government debt yields had bounced back slightly on Tuesday as the Evergrande-led sell-off eased.
The focus this Wednesday is on what Jerome Powell will say at 2:30 p.m. ET following the central bank’s two-day meeting. Investors are looking for more details on a potential tapering before the end of the year.
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, hints about tapering and the newest edition of the central bank’s forecasts could change market expectations around interest rates.
“The dots, as we can call it, is the most uncertain part of today’s announcement probably,” said Anders Persson, the CIO of fixed income at Nuveen. The Fed’s updated projections will include a “dot plot” that shows how Fed officials expect the Federal Funds Rate to move in the years ahead.
“Our base case is that the dot plot can kind of continue to signal that the first rate hike will be in 2023,” Persson added.
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.
