US Treasury yields fell slightly on Wednesday morning ahead of a key Federal Reserve announcement.
The yield on the reference 10-year treasury bond fell to just under 3.41% after marking an 11-year high of 3.48% on Tuesday, while the yield on 30-year treasury bonds fell to 3.3840%. Profitability is moving back in price.
The Federal Open Market Committee will conclude its two-day meeting on Wednesday and is expected to take aggressive action on interest rates in a bid to curb inflation. The US consumer price index rose 8.6% year-on-year in May, its highest annual increase since 1981.
Traders initially sought to raise interest rates by 50 basis points, but in light of hot inflation, the market now estimates a more than 95% chance of an increase of 75 basis points, the highest since 1994, according to CME Group’s FedWatch. (1 basis point equals 0.01%)
The Federal Open Market Committee in May raised the target interest rate on federal funds from 0.75% to 1%, from 0.25% to 0.5%.
In terms of data, May’s retail data should be expected at 8:30 a.m. ET.
A $ 30 billion auction of 119-day treasury bills will be held on Wednesday.
In Europe, the European Central Bank will hold an unscheduled monetary policy meeting on Wednesday, with bond yields rising for many eurozone governments.
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