The 10-year U.S. Treasury yield pulled back on Wednesday, taking a pause in its rapid run that has unnerved financial markets.
The yield on the benchmark 10-year Treasury note fell by about 3 basis points to 1.503% at around 9:40 a.m. ET. The yield on the 30-year Treasury bond dipped 2 basis points to 2.048%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The 10-year yield topped 1.56% on Tuesday, hitting its highest point since June, as investors bet the Federal Reserve would soon start to remove some stimulus as inflation persists. The turnaround in yields has been speedy, with the yield as low as 1.29% just last week. As rates spiked on Tuesday, equity markets fell with the Nasdaq Composite posting its worst day since March.
Federal Reserve Chairman Jerome Powell said Tuesday to the Senate Banking Committee that rising prices could linger for longer than expected. Powell is due to speak again on Wednesday, at 11:45 a.m. ET, on a policy panel discussion at the European Central Bank Forum.
Many strategists expect Treasury yields to be choppy in the near term but to rise even further by the end of the year.
“We think there is room for rates to move higher and forecast the 10-year US Treasury yield to reach 1.8% by the end of the year. As well as the Fed’s more hawkish tone at last week’s FOMC, other central banks are tightening or talking about tightening. In addition, the run down of the US Treasury General Account has finished, taking downward pressure off long-term rates,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
Rising energy prices in Europe is also likely adding to investor concerns over inflationary pressures.
The number of home sales pending in August rose 8.1%, well above the 1.2% consensus from a Dow Jones survey of economists.
An auction is scheduled to be held on Wednesday for $30 billion worth of 119-day bills.
