10-year Treasury yield increases to 2.96% as investors anticipate an aggressive Fed rate hike

May 5, 2022: -On Monday, the 10-year rate crossed the 3% mark, its highest point since late 2018. The benchmark yield has since eased back, though it remains high.

On Wednesday, Respondents to the May CNBC Fed Survey expect the U.S. central bank to announce that it will be hiking interest rates by half a percentage point. Almost three-fifths of respondents also believed that the Fed’s aggressive tightening of monetary policy would be a recession.

The Federal Open Market Committee will release its policy decision statement at 2 p.m. on Wednesday, with Fed Chairman Jerome Powell then scheduled to hold a press conference at 2:30 p.m. ET.

Sunil Krishnan, head of multi-asset funds at Aviva Investors, told CNBC on Wednesday that there might be four 50-basis-point interest rate hikes over the next four central bank meetings.

While these hikes might not seem that small in the latest history, Krishnan said, “By a longer history’s standards, we think it is something the U.S. can manage.”

S&P Global’s April purchasing managers’ index is scheduled for release at 9:45 a.m. ET, while ISM’s April non-manufacturing PMI is because of 10 a.m. ET.

The Russia-Ukraine war remains a focus for investors, with the European Union has announced plans to sanction Russian oil imports on Wednesday.

On Tuesday, U.S. President Joe Biden pressed Congress to pass his massive $33 billion Ukraine aid package during a visit to a Lockheed Martin plant in Alabama that manufactures Javelin anti-tank missiles.

An auction is scheduled to be held on Wednesday for $30 billion for 119-day bills.