Treasury yields rise as investors weigh potential for higher Fed rates

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Nov. 9, 2022. 

Michael Nagle | Bloomberg | Getty Images

U.S. Treasury yields rose Wednesday, as traders assess the likelihood of higher Federal Reserve interest rates.

The yield on the benchmark 10-year Treasury note was up by almost 1.3 basis points at 3.349% near 2 a.m. ET, while the yield on the 30-year Treasury bond saw an uptick of half a basis point to 3.599%. Yields move inversely to prices.

Wednesday will also see an auction for $36 billion of 17-week Treasury bills.

Job data released Tuesday showed vacancies fell below 10 million in February for the first time in nearly two years, pressuring Treasury yields as investors considered whether the information could deter the Fed from further rate hikes.

Future monetary policy moves remain in focus, with the Federal Reserve continuing to tackle inflation and the aftermath of banking collapses that caused turmoil in the bond markets in recent weeks.

The Fed is next scheduled to meet in early May, when the policy rate will likely rise by a further 25 basis points, according to the CME Group’s FedWatch tool.

Federal Reserve Bank of Cleveland President Loretta Mester said in a speech in New York Tuesday that the central bank needed to raise rates to address inflation. She offered no details.

“Precisely how much higher the federal funds rate will need to go from here and for how long policy will need to remain restrictive will depend on how much inflation, and inflation expectations are moving down,” Mester said, adding that it will “depend on how much demand is slowing, supply challenges are being resolved, and price pressures are easing.”

Investors are also looking ahead to the non-farm payrolls data set, due out for release Friday.

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