Fed’s Wednesday Meeting triggers higher US Treasury Yields

Fed’s Wednesday Meeting triggers higher US Treasury Yields

  • US Treasury Yields jumped this morning ahead of a scheduled Fed meeting on Wednesday.
  • The 10-year Treasury note benchmark touched a high of 1.6149%, as the US 30-year old Treasury settled higher at about 2.0621%.
  • The US Treasury is planning to auction seven-year notes worth $32 billion, two-year notes worth $20 billion, and weekly bonds estimated at $26 billion.

This week’s Fed meeting will be one of the most anticipated and the stakes are undoubtedly high, amid a slump in the Chinese economy occasioned by an outbreak of the Coronavirus. Reports this morning indicate the death toll has risen to 106 and the number of infected people is estimated at slightly over 2,000.

US government bond prices were low earlier this morning with concerns over the virus triggering demand for fixed income assets.

At around 2 a.m ET, the 10-year Treasury note benchmark, whose movement is inverse to price, touched a high of 1.6149%, as the US 30-year Treasury settled higher at about 2.0621%.

Cases of the deadly virus have been confirmed in a few locations, including the United States, Australia, Malaysia, France, South Korea, and Japan.

Sri Lanka, German and Cambodia yesterday confirmed the first cases of the Coronavirus within their borders.

 The new virus spooked global financial markets, with most registering sharp declines as more cases get reported.

The Fed’s Wednesday meeting is just hours away; and investors are keen on the outcome, considering it’s the regulator’s first meeting of the year. The US Central Bank’s meeting is also widely expected to maintain the level of the current interest rates.

Already, stakeholders are predicting a scenario where the Fed Reserve will not take any action on its benchmark fed fund while assuring the markets that it is “closely monitoring the current virus outbreak in the region as well other geopolitical uncertainties.”

The Federal Open Market Committee (FOMC) is looking to maintain the fed fund rate at between 1.5% and 1.75% after last year’s three consecutive interest rate cuts.

Sources indicate that the US Treasury is planning to auction seven-year notes worth $32 billion, two-year notes worth $20 billion, and weekly bonds estimated at $26 billion.

With the current market uncertainty due to the ongoing global crisis, Feds are committed to maintaining full employment while boosting inflation, in a move that is expected to infuse more vigilance among policymakers.

While the Wuhan crisis can only be resolved using a medical remedy, players are expected to do everything in their power to avert a global crisis.

By Damian Wood
As an experienced trader, I work for myself managing my own small portfolio and also contributing on several investment news sites. I mix my passion for the industry and journalism to bring my readers informative and trustworthy articles.

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