US Treasury Yields Tense at 4.6%...Will the Fed Announce a Surprise Hike?

▲ US Federal Reserve (Fed), interest rates / AI generated image

US Treasury yields fell ahead of the Fed's interest rate decision, but the 30-year yield maintained the 5% level.

According to the economic news outlet CNBC on July 29 (local time), the US 10-year Treasury yield dropped to around 4.6%. The 2-year Treasury yield, sensitive to monetary policy outlook, fell to around 4.27%. Bond prices and yields move in opposite directions.

The 30-year Treasury yield surpassed 5%. The period during which the 5% level was maintained was 16 trading days, the longest since 2007. High long-term interest rates are pressuring borrowing costs for US households and businesses, including mortgage loans.

The US Federal Reserve (Fed) will announce its benchmark interest rate today after its two-day Federal Open Market Committee meeting. The market reflected approximately a 70% chance that the Fed would maintain the benchmark interest rate at 3.5-3.75%. The possibility of a 0.25 percentage point hike also reached about 30%.

Investors are paying more attention to the remarks of US Federal Reserve Chairman Kevin Warsh than to the rate decision itself. The key is whether rising oil prices and persistent inflationary pressures will lead to signals for further interest rate hikes. As uncertainty grew, US bond investors avoided large bets on the direction of interest rates and favored short-term and high-quality bonds.

Expectations of easing tensions in the Middle East and falling international oil prices pushed down Treasury yields. However, as long-term interest rates remain high, volatility in the bond and stock markets could expand again if the Fed sends hawkish signals.

[Article Key Summary]

-The US 10-year Treasury yield fell to around 4.6% ahead of the Fed's interest rate decision.

-The 30-year Treasury yield surpassed 5% for 16 consecutive trading days, setting the longest record since 2007.

-The market reflected approximately a 70% chance of an interest rate freeze and about a 30% chance of a 0.25 percentage point hike.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*