Treasury yields climb ahead of Fed decision

US Treasury yields climbed Wednesday morning, ahead of the Federal Reserve’s latest monetary policy decision.

The benchmark 10-year Treasury bill yield rose 2 basis points to 1.254% at 4:20 a.m. ET. The yield on 30-year Treasury bills rose 2 basis points to 1.911%. Yields move in the opposite direction of prices and 1 basis point equals 0.01 percentage point.

The Fed will issue a statement Wednesday at 2 p.m. ET, following a two-day Federal Open Market Committee meeting. Fed Chairman Jerome Powell will then speak to the media at 2:30 p.m. ET.

Many investors have focused on when the Fed will start talking about tightening its ultra-relaxed monetary policy, amid concerns about rising inflation. However, it seems likely that Fed officials will also voice concerns about the rapid spread of the delta variant.

Scott Ruesterholz, portfolio manager at Insight Investment, said Wednesday his company expects the Fed not to announce any policy changes or give formal guidelines on reducing asset purchases.

“President Jay Powell will likely seek to use his press conference to highlight the Fed’s reliance on data as well as its patience while reiterating the idea that high inflation is transitory,” he said.

Ruesterholz said that while the delta variant is unlikely to see further blockages implemented in the United States given the level of vaccination, it could slow economic growth.

“This development probably strengthens the hand of the doves on the FOMC who do not want to abolish political accommodation prematurely,” he explained.

Ruesterholz said his company continued to expect the Fed’s Jackson Hole summit to be a “more natural point” to begin formally discussing the cut.

Auctions are scheduled to take place on Wednesday for $ 30 billion in 119-day bills and $ 28 billion in 2-year floating rate notes.

– CNBC’s Patti Domm contributed to this market report.