U.S. bond yields higher ahead of Fed meeting results
(Recasts; adds analyst quote; updates yields)
By Kate Duguid
NEW YORK, March 19 (Reuters) - U.S. Treasury yields were
modestly higher in afternoon trade on Tuesday, as investors
await insight on the Federal Reserve's policy path when the U.S.
central bank ends its two-day meeting on Wednesday, amid broad
expectations that it will hold rates steady.
The probability the Fed will keep rates at the current
225-250 basis-point level was 98.7 percent on Tuesday, when the
U.S. central bank's Federal Open Market Committee (FOMC) started
the policy meeting, according to CME Group's FedWatch tool. Weak
data published this month, including February jobs data that
drastically missed expectations, has supported the Fed's pause
in rate hikes.
"We firmly believe that the Fed will remain on hold - and
that's pretty much priced in if you look at bond futures
markets," said Andrew Dassori, chief investment officer at
Wavelength Capital Management.
In January, the Fed pivoted after hiking rates four times in
2018, pledging patience before making further moves. In
February, Fed Chair Jerome Powell also said the central bank
would stop shrinking its balance sheet later this year.
New orders for U.S.-made goods rose less than expected in
January and shipments fell for a fourth straight month, offering
more evidence of a slowdown in manufacturing activity - and in
the American economy.
Although unchanged rates have been priced in, investors will
be watching to see if the Fed's dot plot, the diagram which
shows individual committee members' rate views for the coming
three years, aligns with the patient approach the Fed has
expressed. Investors will also be looking for details on whether
the central bank will continue to shed bond holdings from its
"I don't expect any major moves ahead of tomorrow's FOMC. I
think a lot of people are looking towards that to see what's in
store, how the dots play out," said Justin Lederer, Treasury
analyst and trader at Cantor Fitzgerald.
The staid nature of the Treasury market on Tuesday persisted
despite some trade developments. U.S. Trade Representative
Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to
travel to China next week for negotiations with Chinese Vice
Premier Liu He, a Trump administration official said. It will be
the first round of talks since President Donald Trump delayed a
March 1 deadline to raise tariffs on $200 billion worth of
The 10-year Treasury yield was last at 2.616
percent, 1.5 basis points higher from its last close. The 2-year
Treasury yield, which is a proxy for investor
expectations of interest-rate hikes, was up 1.9 basis points, at
2.475 percent. At the other end of the maturity range, the
30-year yield was up 1.5 basis points. at 3.025
(Reporting by Kate Duguid; Editing by Leslie Adler)
First Published: 2019-03-19 16:14:01
Updated 2019-03-19 22:25:05
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.