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Five-year Treasury yields rose to as high as 2.149%, their
highest since May 2019, while 10-year yields rose to 2.204% and
were last up 2 bps on the day.
Thirty-year yields briefly touched 2.537%, their highest since
August 2019.
The Fed concludes a two-day meeting later on Wednesday and is
expected to deliver its first rate increase in three years, in
what is likely to be a series of rate increases to tame
inflation.
The urgency surrounding the Fed's policy meeting this week has
intensified because inflation has shown no signs of easing and
could rise further since Russia's invasion of Ukraine has driven
up oil prices.
U.S. money markets price in roughly seven, 25 basis point rates
hikes in total this year.
"We have priced in a lot already and so far that hasn't caused
big market troubles," said Jan von Gerich, chief strategist at
Nordea.
"But it's clear that the U.S. inflation outlook calls for more
than just a fine-tuning of policy. This (rate-hiking) cycle is
going to be a long one."
U.S. headline inflation is running at almost 8% and data on
Tuesday showed producer prices rose in February at an annual
rate of 10% following a similar gain in January.
Graphic: US Treasury yields rise ahead of Fed:
https://fingfx.thomsonreuters.com/gfx
/mkt/znvnenraopl/UST1603.PNG
(Reporting by Dhara Ranasinghe; Editing by Toby Chopra)
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