Ten-year US Treasury yields reached 1.64% early Wednesday, reaching a new 13-month high, ahead of a press conference with Federal Reserve Chairman Jerome Powell after the central bank’s two-day policy meeting .
The yield on the standard 10-year treasury note rose to 1.644% at 06:00 ET. Yields on the 30-year Treasury bond rose to 2,395%. Returns move inversely to prices.
The Federal Open Market Committee’s two-day policy meeting concludes at 2:00 PM ET, followed by a press conference with Powell.
The Fed will announce new economic and interest rate forecasts, which may indicate that Fed officials expect to raise interest rates, or even before 2023. The central bank is expected to recognize stronger growth, which should put the Fed’s easy policy in the spotlight, especially given the new $ 1.9 billion in federal stimulus spending.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, told CNBC’s Squawk Box Europe on Wednesday morning that he would be “surprised” if the Fed indicated it would step in to dampen rising effects at these levels.
Ten-year treasury yields have recently risen sharply amid concerns about potential growth in inflation as economies reopen and recover from the coronavirus pandemic. The ten-year yield has risen by more than half a percent since the end of January and has risen by 1.6% in recent weeks.
However, Shepherdson emphasized that it was “still a zero in real terms.”
Shepherdson believed that while Powell would once again push back from the market’s inflation fears, he suggested that the Fed chairman would not speak at Wednesday’s press conference about reducing his bond-buying program.
He explained that it is that ‘once the Fed starts talking about declining, then yields will rise immediately, because that’s what markets are doing. You give markets a thumbs up and they take a yard – especially right now in the treasury. ‘
“So the Fed wants to think that I really want to silence this speech so much that they can not,” he added.
Shepherdson pointed out that the Fed’s lack of indication of when policy changes may come is “kind of justified because this recovery is still a prediction.”
Meanwhile, the data for the number of building permit approvals and new housing construction projects should appear on Wednesday at 08:30 ET on Wednesday.
An auction is being held Wednesday for $ 35 billion in 119-day bills.
– CNBC’s Maggie Fitzgerald contributed to this report.