U.S. Treasury yields were slightly lower on Wednesday as investors awaited the conclusion of the Federal Reserve’s latest meeting and hoped for clues about the interest rate outlook.
The yield on the 10-year Treasury was down by about four basis points at 4.103%. The 2-year Treasury yield was last down less than one basis point at 4.354%.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
Yields moved lower Wednesday morning after payrolls processing firm ADP reported that private job growth slowed in July, while the pace of wage gains saw the smallest increase since July 2021.
The quarterly employment cost index, a closely watched inflation variable for central bankers, increased less-than-expected, the Labor Department reported Wednesday.
With the Fed meeting set to end on Wednesday, investors looked ahead to the central bank’s monetary policy announcement and the post-meeting press conference by Fed Chair Jerome Powell. Many are hoping to gain insight into policymakers’ expectations for interest rates in the coming months from the press conference and other guidance issued by the Fed after its meeting.
Markets are widely expecting the Fed to keep rates unchanged at the 5.25% to 5.5% range this month. However, traders are pricing in a September rate cut and are hoping for clues from the Fed about how likely this could be.
Questions also remain over how many rate cuts could be implemented by the Fed this year. After this month’s meeting, three more are in the calendar for the central bank in 2024.
On Tuesday, the Labor Department’s Job Openings and Labor Turnover Survey showed that job openings declined in June, coming in at 8.18 million. The hiring rate hit its highest level in nearly 11 years when excluding data affected by the Covid-19 pandemic.
