U.S. Treasury yields inch up with Fed decision on tap for Wednesday
TLT•U.S. Treasury yields edged higher Tuesday ahead of the Federal Reserve’s Wednesday decision, with the 10-year yield at 4.988%. Rate futures priced in a 93% chance of no change this week and a roughly 75% chance of a quarter-point hike in December.
1. Yields edge higher
U.S. Treasury yields mostly edged higher in subdued trading Tuesday as investors weighed the outlook for interest rates ahead of the Federal Reserve’s Wednesday decision. The benchmark 10-year yield rose 0.2 basis points to 4.988%, remaining below 5%, while the two-year yield gained 2.4 basis points to 4.735%.
2. Fed outlook and auction
The Fed is widely expected to leave rates unchanged Wednesday, though rate futures priced in a roughly 75% chance of a quarter-point hike in December. A $70 billion auction of five-year notes had mixed results: its yield was slightly above the rate indicated at the bid deadline, while its bid-to-cover ratio was slightly higher than at the prior auction.
3. Economic and AI focus
September orders for key U.S.-manufactured capital goods increased, pushing yields higher early in the session. Investors are also watching earnings from Alphabet, Microsoft and Amazon this week for evidence that AI investments are producing growth, while scrutinizing the sustainability of debt-funded spending.
