The benchmark 10-year Treasury yield climbed to 5.307% early Wednesday as traders positioned for a $39 billion 10-year note auction and the release of the Federal Reserve's latest meeting minutes. The moves follow a six-week sell-off in bonds tied to inflation and energy-price concerns, even as markets now lean toward a pause at the Fed's next meeting.
The benchmark 10-year Treasury yield rose 3 basis points to 5.307% early Wednesday, reversing the previous session's retreat. The 30-year Treasury bond added 4 basis points to 5.69%. The 2-year Treasury yield ticked up one basis point to 4.801%. Yields and bond prices move in opposite directions.
Auction and FOMC minutes in focus
Investors are watching two Federal Reserve-related events Wednesday. FOMC meeting minutes are due at 2:00 p.m. ET and will be scrutinized for clues on the Fed's policy thinking. At its September meeting, policymakers voted to raise interest rates for the first time since 2023.
The Treasury also plans to sell $39 billion of 10-year notes on Wednesday, a sale that will test whether current yields are attractive enough to draw buyers or whether investors will demand a bigger premium amid concerns about inflation, debt levels and term risk.
Six weeks of selling, but a pause now priced in
Bond yields have been selling off over the past six weeks as investors worried about inflation and rising energy prices. Even so, traders are now pricing in a 78% chance that the Fed will keep rates unchanged at its next meeting, according to the CME Group's FedWatch tool.
Analysts at BMO, led by Head of U.S. Rates Strategy Ian Lyngen, said they were encouraged by the previous day's 3-year auction, which stopped through slightly and didn't tail as recent coupon auctions had. They added that Wednesday's 10-year supply carries far more weight for setting the tone in U.S. rates, and said they would watch for a meaningful auction concession ahead of the reopening of 10-year notes.
Source: CNBC International
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