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Two-month through 30-year Treasury yields rose Wednesday morning, after Federal Reserve Chairman Jerome Powell reiterated in written testimony to Congress that more interest rate hikes are likely to be on the way this year.
What’s happening?
-
The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.734%
was 4.739%, up from 4.695% on Tuesday. -
The 10-year Treasury yield
TMUBMUSD10Y,
3.780%
rose to 3.762% from 3.726% Tuesday afternoon. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.859%
advanced to 3.85% from 3.815% on Tuesday.
What’s driving markets?
In testimony prepared for delivery to the House Financial Service Committee on Wednesday, Powell plans to tell Congress that, with U.S. inflation well above target, more interest rates are likely this year. However, he was vague about the timing.
”Nearly all FOMC [Federal Open Market Committee] participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” he said in prepared remarks. Powell will make his Capitol Hill appearance beginning at 10 a.m. Eastern time, the first in two days of semi-annual congressional testimony.
While investors are hoping for fresh insight on the central bank’s monetary policy plans, particularly during the question-and-answer session, analysts aren’t expecting much change from the hawkish message delivered by policy makers at their meeting last week. Last Wednesday, Fed officials held the benchmark interest-rate target steady at between 5% and 5.25%, and indicated two more hikes are coming this year.
Read: ‘Confused’ markets get another chance to hear Fed’s Powell ‘flesh things out’ on 2023 rate path
Investors will also hear from Chicago Fed President Austan Goolsbee, who is due to speak at 12:25 p.m.
Elsewhere, hotter-than-expected consumer prices in the U.K. is raising the prospect of a bigger-than-expected interest rate hike of 50 basis points. The yield on the 10-year gilt
TMBMKGB-10Y,
rose 11.1 basis points to 4.447%.
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