U.S. Treasury Yields Rise Ahead of Federal Reserve Interest-Rate Decision

By Emese Bartha

Yields on U.S. Treasurys rose in Asian trade on Wednesday in the run-up to the Federal Reserve's interest-rate decision later in the day.

The two-year Treasury yield rose 1.9 basis points to 4.755%, while the 10-year Treasury yield increased 3.3 basis points to 5.025%, according to Tradeweb.

Money markets priced in a 91% probability of unchanged interest rates, according to LSEG. A hike is almost fully priced for December.

"Patience should not be confused with complacency," said Alessia Berardi, head of global macroeconomics and emerging markets strategy at Amundi Investment Institute in a note. In line with the market, Amundi expects the Fed to keep interest rates on hold.

"Admittedly, the labour market now looks less strong and market rates remain high," she said. "However, the inflation outlook has not changed, so the Fed still has accommodation to remove."

While the Fed's monetary policy meeting is of immediate attention, investors also look ahead to the Treasury's quarterly refunding announcement next week. Given in particular the recent strong selloff, which saw the 10- and 30-year Treasury yields surging to 24-year highs earlier in October, any potential signal that the Treasury would adjust long-end issuance to reflect lower demand will be watched.

The Treasury's questionnaire for primary dealers ahead of the refunding announcement, asking their perspectives on structural changes in investor demand and expectations for future auction sizes, was an important step toward advancing the discussion around upcoming adjustments to Treasury issuance, Deutsche Bank strategists said in a note.

The strategists' analysis of Treasury holdings data and portfolio weighted average maturity metrics suggests that "there has been a retrenchment in demand for long-dated Treasurys," they said. This has been driven by a shrinking pool of buy-and-hold portfolios and a shift in preferences toward shorter maturities, they said.

As Treasury faces higher borrowing needs over the coming years, and with the weighted average maturity in the market near historical highs providing some flexibility, "there is a compelling case for more proactively shortening the maturity profile of future issuance," they said.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

October 28, 2026 03:21 ET (07:21 GMT)