U.S. Treasury yields declined on Wednesday as investors awaited the latest interest rate decision and guidance on the monetary policy outlook from the Federal Reserve.
At 4:09 a.m. ET, the 10-year Treasury yield was over three basis points lower at 4.0241%. The yield on the 2-year Treasury was last down by more than three basis points to 4.3221%.
Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.
The Federal Reserve is due to announce its latest interest rate decision on Wednesday and is widely expected to keep rates unchanged, as it has done at its previous three meetings.
This comes as recent economic data, including the personal consumption expenditures price index, the Fed’s favored inflation gauge, have suggested that pressures from higher prices are easing.
Investors are also hoping that the central bank will provide hints about the path ahead for monetary policy and interest rates in guidance issued alongside the rate decision and Fed Chairman Jerome Powell’s post-meeting press conference.
Though policymakers at the last Fed meeting in December suggested rate cuts would be likely in 2024, they did not provide clues about when they may take place. Traders were last pricing in an around 45% chance of a rate cut being announced at the next central bank meeting in March, CME Group’s FedWatch tool showed.
The Fed has so far also not excluded the possibility of further interest rate hikes, which would depend on how the economy develops, and investors will be scanning the post-meeting statement for any shifts around this narrative.
Also on Wednesday, ADP’s private payrolls report is due ahead of further labor market data later in the week.
