US Treasury bond yields rose Wednesday ahead of the Federal Reserve’s latest monetary policy decision.
The benchmark ten-year government bond yield rose 2 basis points to 1.256% at 12:00 PM ET. The yield on the 30-year government bond rose 2 basis points to 1.913%. The returns move inversely to the prices and 1 basis point corresponds to 0.01 percentage points.
The Fed is due to issue a statement on Wednesday at 2:00 p.m. ET after 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.
With concerns over rising inflation, many investors have focused on when the Fed will start talking about tightening monetary policy. However, it looks likely that Fed officials will also raise concerns about the rapid spread of the Delta variant of Covid and may instead stick to their ultra-loose monetary policy.
Scott Rüsterholz, a portfolio manager at Insight Investment, said on Wednesday that his firm expected the Fed not to announce any policy changes or to issue any formal guidance on reducing asset purchases.
“Chairman Jay Powell will likely try to use his press conference to stress the Fed’s data dependency and patience while reiterating the view that increased inflation is temporary,” he said.
Rüsterholz said that while the Delta variant will not introduce any new locks in the US given the vaccination level, it could slow economic growth.
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“This development is likely to strengthen the hand of the doves in the FOMC who do not want to end policy adjustments prematurely,” he said.
Rüsterholz said his company continues to believe that the Fed’s Jackson Hole summit is a “more natural point” to officially discuss tapering.
Thanos Bardas, Co-Head of Investment Grade Fixed Income at Neuberger Berman, said of all of the meetings remaining for the year, he expects this to be the “least fireworks display”.
Auctions for $ 30 billion in 119-day notes and $ 28 billion in 2-year floating rate notes are due to take place on Wednesday.
– CNBC’s Patti Domm and Jesse Pound contributed to this market report.
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