U.S Treasury Yields Rise Ahead of Fed Meeting as Inflation Persists

U.S Treasury yields slightly increased on Tuesday in anticipation of economic data that may offer insights into the current state of the economy ahead of the Federal Reserve’s meeting, scheduled to begin today and conclude tomorrow with a new interest rate decision and press conference. Investors are eagerly awaiting fresh guidance regarding the outlook for interest rates as questions about when cuts will be made this year have been at the forefront of their minds. Initially, markets had anticipated that rates would decrease in June; however, recent economic data has suggested that inflation remains persistent, and the economy continues to thrive, causing some analysts to believe that rate reductions may not occur until September. Last week’s personal consumption expenditures price index (PCE) report for March exceeded expectations slightly as headline PCE rose by 2.7% on an annual basis while core PCE increased by a similar margin from the previous year, reflecting a 2.8% increase in costs excluding food and energy expenses. Today’s consumer confidence insights will also be closely monitored before various labor market data is due to follow later this week including job openings figures for March as well as April’s nonfarm payrolls report. Other economic indicators such as euro zone gross domestic product (GDP) readings and preliminary inflation statistics for the single currency area are also scheduled for release today. The yields on both 10-year Treasury bonds, which currently stand at around two basis points higher than yesterday’s levels, and 2-year Treasuries have risen by less than one basis point to reach a yield of approximately 4.63% and 4.98%, respectively. Bond yields inversely correlate with bond prices. One basis point equals 0.01%.