Treasury yields jumped Wednesday afternoon, as traders sold off U.S. government debt after a weak $16 billion sale of 20-year bonds.
What is happening
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The yield on the two-year Treasury note BX:TMUBMUSD02Y rose 3.5 basis points to 4.645% from 4.610% on Tuesday. Yields move in the opposite direction to prices.
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The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose 3.9 basis points to 4.315% from 4.276% on Tuesday.
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The yield on the 30-year Treasury note BX:TMUBMUSD30Y rose 3.1 basis points to 4.479% from 4.448% on Tuesday.
What drives the markets?
A $16 billion auction of 20-year Treasuries produced “very ugly” results Wednesday afternoon, as dealers stepped in to capture an above-average 21.2% share of the sale, according to Tom Di Galloma, co-head of global Treasury interest rate trading. . BTIG in New York.
The auction results sparked an afternoon sell-off in government debt ahead of the release of minutes from the Federal Reserve's January 30-31 monetary policy meeting at 2 p.m. ET.
Analysts will look to the extent to which the Fed's meeting minutes reflect ongoing concern about price pressures, in light of stronger-than-expected inflation and jobs data that have since encouraged policymakers to pull back on March's rate cuts.
Federal Reserve funds futures traders expect a 93.5% probability that the central bank will leave interest rates unchanged at between 5.25% and 5.50% on March 20, according to the CME FedWatch tool. The chance of a rate cut of at least 25 basis points by June is expected to reach 72.3%. The central bank is mostly expected to cut interest rates by at least three-quarters of a point by December.
In an interview with SiriusXM that aired Wednesday and was cited by Bloomberg, Richmond Fed President Thomas Barkin said price pressures in some sectors remain too high despite the overall improvement in inflation.
