Treasury yields rose slightly on Monday as bond-market participants geared up for this week’s Federal Reserve meeting , which could give clues on whether the central bank will tweak its balance-sheet runoff.
The 10-year Treasury note yield TMUBMUSD10Y, +0.66% rose 1.1 basis points to 2.605%, coming off its lowest levels in more than three months, while the 2-year note yield TMUBMUSD02Y, +0.67% was up 1.1 basis points to 2.458%. The yield for the 30-year bond TMUBMUSD30Y, +0.18% , also known as the long bond, was virtually unchanged at 3.014%. Bond prices move inversely to yields.
Investors are keeping an eye on the two-day Fed meeting, kicking off on Tuesday. Though no rate moves are expected, analysts speculate the central bank will shift its dot plot, which includes the Fed’s interest-rate forecasts, to reflect its emphasis on a more patient policy outlook. Some also expect the Fed to cuts its growth and inflation projections for this year.
Any additional details on plans for the balance-sheet runoff will attract scrutiny amid speculation the central bank will signal the end of “quantitative tightening” this year on Wednesday. The central bank has previously insisted the process of allowing securities to roll off its portfolio is on “autopilot,” but senior Fed officials said over the past few months that the central bank could change tack if the shrinking balance sheet was presenting problems.
“Wednesday’s FOMC meeting is being written up as the week’s big event, though a rate change is highly unlikely. We think they’ll confirm that the Fed’s balance sheet runoff will end this year, though they may not give us a lot more detail than that,” wrote Kit Juckes, global macro strategist at Société Générale.
Read: Headwinds might turn into tailwinds soon for U.S. economy after shaky start to new year
Italian debt rallied after Moody’s kept Italy’s credit rating on hold late Friday. The 10-year Italian government bond yield TMBMKIT-10Y, -3.13% fell 6 basis points to 2.45%, around its lowest level since May 2018, Tradeweb data show.
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