Treasury yields rise ahead of big Fed rate decision

The 10-year U.S. Treasury yield traded at 2.96% on Wednesday morning, slightly off its 3% high, with investors anticipating a big Federal Reserve interest rate decision later in the day.

The yield on the benchmark 10-year Treasury note rose less than a basis point to 2.9656% at 4:15 a.m. ET. The yield on the 30-year Treasury bond was relatively flat, trading at 3.0079%.Yields move inversely to prices and 1 basis point is equal to 0.01%.

The 10-year rate crossed the 3% mark on Monday, its highest point since late 2018. The benchmark yield has since eased back, though it remains high.

Respondents to the May CNBC Fed Survey expect the U.S. central bank to announce on Wednesday that it will be hiking interest rates by half a percentage point. Nearly three-fifths of respondents also believed that the Fed’s aggressive tightening of monetary policy would end in a recession.

The Federal Open Market Committee is due to release its policy decision statement at 2 p.m. on Wednesday, with Fed Chairman Jerome Powell then scheduled to hold a press conference at 2:30 p.m. ET.

Sunil Krishnan, head of multi-asset funds at Aviva Investors, told CNBC’s “Squawk Box Europe” on Wednesday that there’s a possibility of four 50-basis-point interest rate hikes over the next four central bank meetings.

While the size of these hikes might not seem that small in the context of recent history, Krishnan said “by the standards of longer history, we think it is something the U.S. can manage.”

Stock picks and investing trends from CNBC Pro:

Ahead of the rate decision, the ADP April Employment Change report is set to come out at 8:15 a.m. ET.

March’s import and export data is then due out at 8:30 a.m. ET.

S&P Global’s April purchasing managers’ index is scheduled for release at 9:45 a.m. ET, while ISM’s April non-manufacturing PMI is due out at 10 a.m. ET.

The Russia-Ukraine war also remains a focus for investors, with the European Union having announced plans to sanction Russian oil imports on Wednesday. 

U.S. President Joe Biden on Tuesday pressed Congress to pass his massive $33 billion Ukraine aid package during a visit to a Lockheed Martin plant in Alabama that manufactures Javelin anti-tank missiles.

An auction is scheduled to be held on Wednesday for $30 billion for 119-day bills.

CNBC’s Holly Ellyatt contributed to this market report.

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