The yield on the 10-year US Treasury note fell on Wednesday, putting a halt to a fast rise that has unsettled financial markets.
At 9:40 a.m. ET, the yield on the benchmark 10-year Treasury note decreased by roughly 3 basis points to 1.503 percent. The 30-year Treasury bond yield fell two basis points to 2.048 percent. Yields fluctuate in the opposite direction of prices, with 1 basis point equaling 0.01 percent.
On Tuesday, the 10-year yield surpassed 1.56 percent, its highest level since June, as investors gambled that the Federal Reserve will soon begin to remove some support as long as inflation remains strong. Yields have changed quickly, with the yield as low as 1.29 percent just last week. Equity markets dropped on Tuesday as interest rates rose, with the Nasdaq Composite having its worst day since March.
Chairman of the Federal Reserve, Jerome Powell, told the Senate Banking Committee on Tuesday that increasing prices might last longer than projected. Powell is scheduled to appear on a policy panel discussion at the European Central Bank Forum on Wednesday at 11:45 a.m. ET.
Treasury rates are expected to be turbulent in the short term, but to climb much more by the end of the year, according to several experts.
“We believe rates have potential to rise further, and we expect the 10-year US Treasury yield to hit 1.8 percent by the end of the year. Other central banks are tightening or talking about tightening, in addition to the Fed’s more hawkish tone at last week’s FOMC. In addition, the run-down of the US Treasury General Account is complete, alleviating downward pressure on long-term rates, according to Mark Haefele, chief investment officer at UBS Global Wealth Management.
Investors’ fears about inflationary pressures are anticipated to be exacerbated by rising energy costs in Europe.
The number of pending home sales increased by 8.1 percent in August, well above the 1.2 percent forecast in a Dow Jones survey of analysts.
On Wednesday, a $30 billion auction of 119-day notes is set to take place.
