Treasury yields rise ahead of Fed verdict


US Treasury yields edged up Wednesday morning as investors waited to see the results of the latest Federal Reserve policy meeting.

The benchmark 10-year Treasury bill yield climbed less than a basis point to 1.4445% at 4 a.m. ET. The yield on 30-year Treasury bonds rose 1 basis point to 1.8301%. Yields move in the opposite direction of prices and 1 basis point equals 0.01%.

The Fed is expected to close its two-day policy meeting in December on Wednesday afternoon, with President Jerome Powell scheduled to hold a press conference at 2:30 a.m. ET.

The US central bank is expected to announce that it will accelerate the reduction in its bond buying program, as inflation continues to rise.

The Producer Price Index, which is a measure of inflation, posted a higher than expected November reading on Tuesday. The PPI showed a 9.6% year-on-year increase, which was the fastest pace on record and higher than the 9.2% increase predicted by economists.

A CNBC investigation of the Fed predicts the Fed will double the pace of the cut to $ 30 billion at its December meeting, which would end the $ 120 billion in monthly asset purchases by March . The central bank will then hike rates three times in each of the next two years, starting in June 2022, survey respondents predict.

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Greg Williamson, chief strategy officer at Pluribus Labs, told CNBC’s “Squawk Box Europe” Wednesday that the Fed had a “very narrow line to walk” with what it said after the meeting.

“He has to convince the markets that he is serious about fighting inflation, but he cannot confuse or disrupt the markets so much with inflation problems that he drives the economy or the markets down.” , he explained.

Williamson also believed the Fed would increase its reduction in asset purchases by an additional $ 15 billion, bringing the monthly total to $ 30 billion. He therefore expects the Fed to be able to complete its reduction process by June of next year, when “dot plots” from central bank officials indicate it might be time to start. increase interest rates.

Meanwhile, retail sales data for November is expected to be released Wednesday at 8:30 a.m. ET. The National Association of Home Builders’ housing market index for December is then expected to be released at 10 a.m. ET.

An auction is slated for Wednesday for $ 35 billion in 119-day bills.

CNBC’s Maggie Fitzgerald contributed to this marker report.


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