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File image of a detail of the facade of the US Treasury Department building in Washington, DC
By Karen Brettell
NEW YORK, March 16 (Archyde.com) – Yields on 10-year U.S. Treasury bonds hit a near three-year high on Wednesday, hours before the Federal Reserve is set to announce its first interest rate hike in more than three years following a two-day monetary policy meeting.
* Rising inflation has led investors to anticipate that the US central bank, which is due to release its latest monetary policy statement and new economic projections by 1800 GMT, will aggressively raise rates and reduce its balance sheet in an effort to curb rising price pressures.
* However, whether the Fed will be willing to tighten measures further if growth deteriorates will be a key question as inflation worsens in consumer finance and sanctions imposed on Russia following its invasion of Ukraine add further. obstacles to inflation and growth prospects.
* Fed officials will update their rate forecasts, known as “dot plots” (a document that anonymously reflects where Fed members believe official interest rates will be in coming years), and quarterly economic projections for the first time since December 2021.
* Two-year note yields traded at 1,860% following reaching 1,894% on Tuesday, the highest level since August 2019. Benchmark 10-year bond yields were at 2,163%, following reaching 2,204 %, a maximum since May 2019.
* The yield curve between 2-year and 10-year debt increased one basis point to 30 basis points.
* Traders have priced in a more aggressive tightening since last week’s consumer price data showed annual inflation in February rose at the fastest pace in 40 years to 7.9%, while Tuesday’s data showed that Producer prices grew 10% annually during the month, matching January’s gain.
(Reporting by Dhara Ranasinghe in London, Edited in Spanish by Manuel Farías)
