10-Year Treasury Yields Soar To 16-Year Peak Ahead Of Fed's Crucial Rate Announcement

The 10-year Treasury closed Tuesday at 4.37% yield, marking its highest level since Nov. 7, 2007 as investors brace for the upcoming Federal Reserve Open Market Committee (FOMC) rate announcement on Wednesday.

September is poised to potentially become the fifth consecutive month of yield increases for the 10-year Treasury, a pattern not seen since late 2021 and the early part of 2022.

This month alone, the yield has jumped by 25 basis points, marking the biggest uptick since February 2023.

In comparison to its 50-day moving average, the 10-year yield currently stands 26 basis points higher, while there’s a 60 basis point positive gap from the 200-day moving average.

In terms of year-to-date performance, the 10-year Treasury, as tracked by the US Treasury 10 Year Note ETF UTEN is down 5.4%.

Read also: Bank Of America Predicts One More Fed Rate Hike In November

Chart: 10-Year Treasury Yields

All Eyes On The Fed

Despite this remarkable climb, the FOMC is expected to maintain its federal funds rate target between 5.25% and 5.5%. Any adjustments to their post-meeting statement are likely to underscore their data-driven approach.

Investors will closely keep an eye on the Summary of Economic Projections (SEP), where the Fed is expected to unveil its forecast on growth, inflation and the projected rate path.

The FOMC’s statement at the conclusion of the two-day meeting will be released on Wednesday at 2:00 p.m. ET, followed by Chairman Jerome Powell‘s press conference at 2:30 pm ET. The CME FedWatch Tool currently places a 99% probability of no rate change and a 1% chance of a 25 basis point increase, raising the rate to a range of 5.5% to 5.75%.

Powell’s remarks at the Jackson Hole conference in late August set the stage for this meeting, emphasizing that while inflation may be moderating, the FOMC isn’t ready to hit the brakes on rate hikes just yet.

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