U.S. Treasury bond yields continued to rise on Wednesday as market participants analyzed the latest statements from Fed policymakers and prepared for the publication of Fed's Beige Book.
The yield on 5-year Treasury bonds rose by 3.0 basis points, reaching 4.035%, while the yield on 30-year bonds was 4.521% (+2.7 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 2.0 basis points to 4.057%, while the yield on 10-year bonds rose to 4.234% (+2.8 basis points), reaching its highest value since July 26.
Favorable economic data and concerns about the deficit are among the factors driving Treasury yields higher, despite the Fed's aggressive rate cut at the September meeting. Traders are concerned that the Fed may be less inclined to cut rates, even as the Fed had forecast another half-point worth of cuts before the year ends. Today, investors will focus on the speeches of Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin. In addition, the Fed's Beige Book, a review of economic conditions across its 12 districts, will be presented today at 18:00 GMT. The latest Beige Book pointed to a slowdown in economic growth, with some strengths, and this trend is likely to be repeated in the October report, but an upside surprise seems more likely given recent data has outperformed forecasts.