Treasury yields were mixed early Wednesday as investors awaited the release of minutes from the Federal Reserve policy meeting earlier this month, and were steadying after a fall for U.S. stocks in the previous day’s session sparked safe-haven demand for government paper.
What yields are doing
- The yield on the 10-year Treasury note TMUBMUSD10Y, 2.753% was at 2.753%, down from 2.758% at 3 p.m. Eastern on Tuesday. Yields and debt prices move opposite each other.
- The 2-year Treasury note yield TMUBMUSD02Y, 2.532% was at 2.516% versus 2.483% Tuesday afternoon.
- The yield on the 30-year Treasury bond TMUBMUSD30Y, 2.961% was at 2.962%, compared with 2.971% late Tuesday.
What’s driving the market
A Treasury rally has sent yields to their lows for the month so far as fears over economic growth contributed to a renewed stock market selloff.
While Treasury prices have bounced since early May, pulling yields down, both stocks and bonds have suffered in 2022. The S&P 500 SPX, -0.81% and Dow Jones Industrial Average DJIA, +0.15% were on track for their worst first 100 trading days to start a year since 1970, while the Nasdaq Composite COMP, -2.35% is set for its worst start in history.
Investors remain focused on inflation and the debate over the Federal Reserve’s ability to bring price pressures under control without sinking the economy into recession. The central bank, which is set to begin unwinding its balance sheet on June 1, delivered a half percentage point rate increase earlier this month following a more traditional quarter-point, or 25 basis point, hike earlier this year. Fed officials have signaled at least two more half-point rises are in store.
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Minutes of the May 3-4 Fed meeting, set for release at 2 p.m., will be watched for clues to the Fed’s path.
Ahead of that, data on U.S. April durable goods orders are due at 8:30 a.m., while Fed Vice Chair Lael Brainard is scheduled to speak at 12:15 p.m.
What analysts say
The minutes “will likely reinforce the view that additional 50 basis point rate hikes will be needed in the next two meetings, although the rate path after that becomes a lot foggier,” said Raffi Boyadjian, lead investment analyst at XM, in a note.
Policy makers’ views ”on how quickly they anticipate inflation to come down as well as any potential revelations on the balance sheet reduction, such as the possibility of the outright sale of assets, particularly of mortgage backed securities, will be scrutinized by investors,” the analyst said.