Treasury yields reach higher ahead of Fed meeting

January 31, 2023: On Monday, U.S. Treasury yields increased as investors awaited the beginning of the Federal Reserve’s initial meeting of the year and considered the outlook for the finances on Tuesday.

Three basis points increased the yield on the benchmark 10-year Treasury to 3.551%. The 2-year Treasury yield traded more than three basis points higher at 4.24%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors awaited the Fed’s meeting, concluding with the central bank’s recent interest rate decision. Many are anticipating the Fed to announce a 25-basis point increase then.

That would be a much slowdown of the pace of rate hikes put by the Fed in its fight against inflation. A lot of investors have been hoping for this as concerns regarding the central bank leading the U.S. economy into a slump by higher rates too much and too quickly have spread.

Data released earlier this month showed that consumer and wholesale prices fell every month in December. On Friday, the personal consumption expenditure index, one of the Fed’s favoured inflation measures, indicated that though prices are still increasing, they are doing so at a reduced pace.

On Monday, investors will follow the release of January’s Dallas Fed manufacturing index report, tracking business activity in the region.

A series of key labour market reports will be released throughout the week, including job openings and non-farm payroll figures. Corporate earnings season keeps for a slew of a tech firms.