10-year yield rises to 3-year high as Fed plans a speedier policy tightening
The 10-year Treasury yields rose to a three-year high Wednesday as the Federal Reserve officials laid out their plans to shrink their trillions in bond holdings.
The benchmark rate traded 6 basis points higher around 2.6%, near its highest level since March 2019, as it stages a two-day jump. The 10-year closed Monday at around 2.4%. Yields move inversely to prices, and 1 basis point is equal to 0.01%.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | U.S. 1 Month Treasury | 5.363% | -0.002 |
| US3M | U.S. 3 Month Treasury | 5.386% | -0.005 |
| US6M | U.S. 6 Month Treasury | 5.369% | -0.002 |
| US1Y | U.S. 1 Year Treasury | 5.126% | -0.004 |
| US2Y | U.S. 2 Year Treasury | 4.814% | +0.023 |
| US10Y | U.S. 10 Year Treasury | 4.412% | +0.035 |
| US30Y | U.S. 30 Year Treasury | 4.551% | +0.033 |
Fed meeting minutes released Wednesday showed that officials planed to reduce their trillions in bond holdings at their March meeting, with a consensus amount around $95 billion.
Meanwhile, policymakers indicated that one or more 50-basis-point interest rate hikes could be warranted to battle surging inflation.
"Many participants noted that— with inflation well above the Committee's objective, inflationary risks to the upside, and the federal funds rate well below participants' estimates of its longer-run level — they would have preferred a 50 basis point increase in the target range for the federal funds rate at this meeting," the minutes said.
Wednesday's move put the 10-year yield above its 2-year counterpart, which traded at 2.47%. The 2-year had recently been trading above the 10-year triggering a so-called yield curve inversion.
The yield on the 5-year U.S. government bond moved 1 basis point lower to 2.682%, and the 30-year Treasury yield rose 3 basis points to 2.61%. Yields move inversely to prices, and 1 basis point is equal to 0.01%.
Investors also weighed remarks from Federal Reserve Governor Lael Brainard. Brainard, who normally favors easy policy and low rates, said the central bank needs to move quickly to drive down inflation.
"Inflation is much too high and is subject to upside risks," she said in prepared remarks Tuesday. "The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted."
— CNBC's Vicky McKeever contributed to this market report.