10-year Treasury yield hovers around 5% ahead of Fed rate decision
U.S. Treasury yields were steady on Wednesday as markets awaited the Federal Reserve's policy announcement, with the 10-year yield near 5% and futures indicating a high probability of a quarter-point hike.
U.S. Treasury yields were largely unchanged Wednesday morning while investors prepared for the Federal Reserve's two-day policy meeting conclusion. At 4:30 a.m. ET, the benchmark 10-year Treasury yield stood at 5.004%, with the 20-year and 30-year notes at 5.409% and 5.372% respectively. The Federal Open Market Committee is scheduled to release its decision at 2 p.m. ET.
CME FedWatch data showed a roughly 92.5% probability that the Fed will raise its target rate by a quarter point, up from about one-third a month earlier. Recent economic releases indicated that U.S. annual inflation was 3.4% in August and the personal consumption expenditures price index rose 3.7% year-over-year in July, while oil prices remained above $100 a barrel, sustaining inflation concerns.
Brent Wilsey, chief investment officer at Wilsey Asset Management, warned that a decision to hold rates could surprise equity markets and affect the Fed's credibility. Jonathan Pryor, co-head of FX dealing at Marex, said the Fed appears to be entering a new phase of monetary policy, noting a shift from earlier expectations of a rate-cutting cycle to a more cautious stance as central banks address supply-side inflation pressures.