Treasury yields climbed on Tuesday as investors weighed remarks from Federal Reserve officials and scanned them for hints about the central bank’s monetary policy plans.
The yield on the 10-year Treasury was up by around 11 basis points at 3.628%. The 2-year Treasury was last trading at around 4.274% after rising by about 8 basis points.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Investors looked to comments from Fed officials for fresh insights into the central bank’s expectations for inflation and interest rate hikes.
Speaking at an Atlanta Rotary Club event on Monday, Atlanta Fed president Raphael Bostic said he believed interest rates should go above 5%, and then stay at this level into 2024. Bostic also suggested that the size of the next rate hike would be linked to upcoming inflation data.
Fed chairman Jerome Powell made remarks Tuesday about the importance of the central bank staying politically independent when working to cool inflation
Uncertainty about whether the Fed will increase rates by 25 or 50 basis points at its next meeting later this month is widespread among investors. Many are hoping that the consumer inflation print due on Thursday will provide fresh hints.
The Fed has been hiking interest rates as it battles persistently high inflation. At its December meeting, the central bank slowed the pace of rate increases to 50 basis points. Before this, the Fed had implemented four consecutive 75 basis point rate hikes.
That pace prompted concerns from investors that the rate hikes would drag the U.S. economy into a recession.