Federal Reserve Board Chairman Jerome Powell speaks during a news conference following the Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, June 14, 2023.
Mandel and | AFP | Getty Images
U.S. Treasury yields rose Wednesday as investors awaited the outcome of what could be Jerome Powell’s final policy meeting as Federal Reserve chairman.
The yield on the US Treasury at 10 years The rating – the key benchmark for U.S. government borrowing – rose more than 5 basis points to 4.406%. THE 2-year Treasury bill the yield, which more closely tracks the Federal Reserve’s short-term interest rate policy, also rose 7 basis points to 3.914%.
One basis point is 0.01%, and yields and prices move in opposite directions.
The Fed’s two-day monetary policy meeting concludes Wednesday, with outgoing Fed Chairman Powell and the Federal Open Market Committee expected to keep interest rates at the current level of 3.50% to 3.75%.
He is expected to lead his fellow policymakers into another cautious pause, with stubborn inflation and a resilient labor market leaving little room for interest rate cuts.
“As far as the dual mandate goes, they would say we’re pretty much in a stable labor market,” Roger Ferguson, an economist and former Fed vice chair, told CNBC. “On the inflation side of the mandate, [there’s] a lot more work to do with a sticky 3% [inflation rate]and I hope they say, ‘We’re going to sit there for a little while and see how this all plays out.'”
Kevin Warsh, Powell’s likely successor, appears poised to take over as head of the central bank. The Senate Banking Committee voted to advance his nomination Wednesday, and a final confirmation vote is now expected in the Senate.
Sen. Thom Tillis said Sunday he was ready to end the block on Warsh’s nomination after the U.S. Justice Department dropped its criminal investigation into now-Speaker Powell. With Tillis’ support, the President’s confirmation Donald TrumpThe Fed’s choice to lead the Fed is all but assured.
Meanwhile, after orders for so-called durable goods in March were higher than expected, investors are also turning their attention to the March personal consumption expenditure figure, due on Thursday.
According to Osaic’s Philip Blancato, a rate cut won’t be feasible in the near term if PCE remains relatively stable, especially as the latest durable goods orders data “reiterates that you really don’t want to cut in this environment because you’re on the verge of a growth phase,” the chief market strategist said.
“The bond market is simply threatened by the idea that a rise in oil leads to a rise in generalized inflation, although this has not yet been validated,” he added. “If the PCE comes in hotter than expected, a lot hotter, then I think [in] On the bond market, we see an increase of 4.5% on the 10-year bond. That wouldn’t surprise me.”
— CNBC’s Jeff Cox and Matt Peterson also contributed to this report.