U.S. Treasury yields climb as investors look toward November Fed meeting

Treasury yields rose on Monday as markets looked ahead to the Federal Reserve's November meeting beginning Tuesday.

The 10-year Treasury yield was up by 5 basis points to 4.058%. The yield on the policy-sensitive 2-year Treasury rose by 7 basis points to 4.493%. Yields and prices have an inverted relationship. One basis point equals 0.01%.

Traders are widely expecting the Federal Reserve to hike interest rates by 75 basis points this week. This would be the sixth rate hike of the year as the central bank fights to curb high inflation.

Markets are also hoping to gain some clarity regarding the Federal Reserve's future policy pathway from the meeting, as questions remain over how high rates will be hiked in late 2022 and throughout 2023. There are concerns that rate hikes are dragging the U.S. economy into a recession, and economic data has been sending mixed signals about inflation.  

Until investors receive more clarity on the economy and inflation, Brian Rehling, head of global fixed income strategy at Wells Fargo Investment Institute expects yields to hover in this range, which he calls a "discovery phase." More certainty could come from November and December consumer price index reports.

"I don't necessarily think you're going see a big drop-off initially, because it's going to take some time for inflation to work lower," he said. "I do think we're in this period where we're kind of probing what the upper end of this cycle is going to look like in terms of rates."

Euro zone inflation released Monday came in at 10.7% for the month, the highest level since the 19-member bloc was formed. Preliminary growth data for the third quarter also showed gross domestic expand 0.2%