NEW YORK: US Treasury yields rose on Wednesday ahead of the release of the Federal Reserve's latest policy statement and the U.S. government's sale of $35 billion in new five-year debt.
The U.S. central bank is expected to leave interest rates unchanged when it issues its statement and acknowledge that turmoil in financial markets threatens its upbeat view of the U.S. economy, leaving the chances of a March hike diminished but alive.
The Fed is due to issue its statement at 2 p.m. EST (1900 GMT) following the conclusion of a two-day policy meeting.
"What today is really about is sensing the response function, the pain threshold of the Fed to market moves," said Aaron Kohli, interest rate strategist at BMO Capital Markets in New York. "It's one of the few meetings where you have some change in the economic data, but a much greater change in the market."
Treasury yields rose as some investors reevaluated expectations the Fed would take a largely dovish tone in its policy statement.
Yields have fallen over the past month on safe-haven buying tied to the sharp drops in oil and stock prices, which have fallen in part due to concerns over an oil supply glut and slowing growth and high corporate debt levels in China.
Benchmark 10-year notes were last down 9/32 in price to yield 2.03 percent, up from 2.00 percent late on Tuesday. The yields have fallen from 2.33 percent on Dec. 30.
The Treasury will sell $35 billion in five-year notes on Wednesday, the second sale of $90 billion in new coupon-bearing debt this week. It will also auction $29 billion in seven-year notes on Thursday.
The government will also sell $15 billion in two-year floating rate notes on Wednesday.
Comments
Comments are closed.