U.S. Treasury yields fell on Tuesday as investors awaited the start of the Federal Reserve’s latest meeting later in the day and fretted over its policy outcome.
At 3:55 a.m. ET, the yield on the benchmark 10-year Treasury was down by more than two basis points to 3.5253%. Meanwhile, the policy sensitive 2-year Treasury yield fell by almost four basis points and was last trading at 4.2218%.
Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.
The Fed is widely expected to announce a 25 basis point hike when its meeting concludes on Wednesday, further slowing the pace of rate increases it has implemented in its battle with inflation.
Investors will also be looking to the central bank for guidance on rate policy and its expectations for broader economic developments. That includes the question of whether inflation will ease and the likelihood of the U.S. economy avoiding a severe recession.
In recent months, concerns about the pace of rate hikes leading to a contraction of the U.S. economy have spread.
On the data front, the S&P Case-Shiller home price index report for November and the Chicago purchasing managers’ index are due Tuesday. Corporate earnings season continues with Pfizer, McDonald’s and General Motors.
The series of fresh data insights could provide hints about the outlook for the U.S. economy and how high inflation and interest rates are affecting companies and consumers.
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