Treasury yields decline as Fed meeting kicks off

U.S. Treasury yields fell on Tuesday as Federal Reserve's latest meeting kicked off and investors fretted over its policy outcome.

The yield on the benchmark 10-year Treasury was down about five basis points to 3.503%. Meanwhile, the policy sensitive 2-year Treasury yield fell by more than five basis points and was last trading at 4.203%.

Yields and prices have an inverted relationship and one basis point is equivalent to 0.01%.


Investors assessed a softer print in the employment cost index, an important measure of wages eyed by the Fed, that showed compensation increased 1% in the fourth quarter. It was below the 1.1% estimate from Dow Jones. Traders hope signs of falling inflation could point to a pause in interest rate hikes from the Fed.

The Fed is widely expected to announce a 25 basis point hike when its meeting concludes on Wednesday, further slowing the pace of rate increases it has implemented in its battle with inflation. Investors will also be looking to the central bank for guidance on rate policy and its expectations for broader economic developments.

Corporate earnings season continued on Wall Street. General Motors shares jumped about 8.4% after reporting earnings results that topped expectations. Exxon Mobil shares rose nearly 2.2% after beating earnings and revenue forecasts in its latest results.