Treasury yields climb as bank concerns ease and investors look to Fed meeting
U.S. Treasury yields rose on Tuesday worries about the banking sector calmed after a turbulent few weeks and the Federal Reserve kicked off its two-day policy meeting.
At 2:30 p.m. ET, the yield on the 10-year Treasury was trading at 3.604% after rising by 12.5 basis points. The 2-year Treasury yield was up by 24.5 basis points to 4.169%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | U.S. 1 Month Treasury | 5.37% | UNCH |
| US3M | U.S. 3 Month Treasury | 5.392% | -0.003 |
| US6M | U.S. 6 Month Treasury | 5.366% | UNCH |
| US1Y | U.S. 1 Year Treasury | 5.137% | +0.007 |
| US2Y | U.S. 2 Year Treasury | 4.827% | +0.036 |
| US10Y | U.S. 10 Year Treasury | 4.422% | +0.045 |
| US30Y | U.S. 30 Year Treasury | 4.562% | +0.044 |
Confidence in the banking sector improved slightly as investors digested the implications of Credit Suisse's takeover by UBS. However, the takeover has also raised some issues, such as holders of additional tier 1 bonds seeing $17 billion of their investments wiped out, which could lead to legal action.
Investor fears on a banking crisis were further alleviated Tuesday after Treasury Secretary Janet Yellen said the government is ready to provide further guarantees of deposits if the banking crisis worsens.
The former Federal Reserve chair said in remarks prepared for a speech to the American Bankers Association said authorities believe they have taken appropriate steps to stem liquidity problems in the sector, but will take more action if needed.
Regional banks in the U.S. also appeared to recover slightly, with the SPDR Regional Banking ETF (KRE) rising 5.5% Tuesday. First Republic shares led the rally, jumping more than 35%.
The Federal Reserve's latest meeting kicked off Tuesday, with the latest interest rate decision expected to be announced Wednesday. Investors are expecting a 25 basis point rate hike.
They are also hoping for fresh guidance about the economic outlook and hints about the central bank's future policy. That includes whether officials will hike rates more than expected and keep them higher for longer, which they had hinted at before the recent banking sector turmoil.