Yields edge higher as focus shifts to Fed’s likely comments

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By Gertrude Chavez-Dreyfuss

NEW YORK- US Treasury yields drifted higher on Tuesday, recovering from multi-week declines in the previous session, as stocks stabilized following Monday’s bloodbath and investors looked ahead to the Federal Reserve’s comments after its two-day policy meeting which ends on Wednesday.

Shares on Wall Street rose, with the Nasdaq sharply higher and Nvidia surging more than 7 percent after plunging 16 percent on Monday amid the emergence of DeepSeek’s cheaper artificial intelligence alternative. The bond market followed suit, with its own selloff on Tuesday that pushed yields higher.

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In afternoon trading, the benchmark 10-year Treasury yield rose 2.1 basis points (bps) to 4.549 percent after falling to a four-week low on Monday. Both 20-year and 30-year bond yields recovered from four-week troughs as well.

On the front-end of the curve, the two-year yield, which is typically tied to Federal Reserve policy expectations, edged up 1.1 bps to 4.207 percent On Monday, the two-year yield dropped to seven-week lows. The three-year five-year and seven-year yields also rose from their lowest levels in seven weeks.

Bond investors are now prepping for the US central bank statement and Fed Chair Jerome Powell’s press briefing on Wednesday.

The Federal Open Market Committee is widely expected to keep its benchmark overnight interest rate in the 4.25 percent-4.50 percent range at the end of its two-day policy meeting. Powell will likely strike a cautious tone in his post-meeting press conference and keep the central bank’s options open to allow policymakers time to assess how President Donald Trump’s administration will reshape the fiscal landscape.

“This rates selloff is likely due to uneasiness about what Powell will say at the press conference,” said Vinny Bleau, director, fixed income capital markets, at Raymond James in Memphis.

“Everybody knows that the Fed is not doing anything. It’s more about getting insight on how many cuts the Fed is thinking about. The market a couple of weeks back has been pricing in just one cut, now we’re back to two.” —Reuters

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