U.S. Treasury yields moved higher on Monday as investors looked ahead to the Federal Reserve’s meeting this week where policymakers are widely expected to cut interest rates.
At 5:16 a.m. ET, the 10-year Treasury yield was up 2 basis points to 4.02%, while the 2-year Treasury note yield was 1 basis point higher at 3.501%. The 30-year bond yield also gained 2 basis point to 4.612%.
One basis point is equal to 0.01% and yields and prices have an inverse relationship.
The Fed’s interest rate decision on Wednesday will be the key event this week and investors are anticipating that policymakers will cut interest rates, especially after the Bureau of Labor Statistics released cooler than expected inflation data last week.
Nearly 97% of traders are pricing in a quarter percentage point cut to 375 to 400 basis points, according to the CME FedWatch Tool.
“With a dearth of data and a still-divided FOMC, our U.S. economists think Chair [Jerome] Powell is unlikely to provide clear signals on the policy path ahead, focusing more on topics including balance sheet policy and financial stability,” Deutsche Bank analysts said in a note.
Meanwhile, U.S. President Donald Trump and China President Xi Jinping are set to meet in South Korea on Thursday with the aim of reducing trade tensions.
U.S. Treasury Secretary Scott Bessent recently said dialogue between the two Presidents have been “constructive, far-reaching, in-depth,” which is reassuring for investors.