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Treasuries Move Sharply Lower As Fed Announcement Looms

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After ending the previous session roughly flat, treasuries showed a substantial move to the downside during trading on Monday.

Bond prices came under pressure early in the session and slid even more firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 13.6 basis points to 2.140 percent.

With the sharp increase on the day, the ten-year yield ended the session at its highest closing level since June of 2019.

The sell-off by treasuries came as traders looked ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

With the Fed widely expected to raise interest rates by 25 basis points, traders will pay close attention to the accompanying statement for clues about further rate hikes.

The central bank is likely to continue raising rates over the comings months in an effort to combat elevated inflation, although the economic impact of the Russia-Ukraine conflict may affect the pace.

Hopes the Russia-Ukraine peace talks that resumed today could lead to a diplomatic solution to the ongoing war may also have reduced the appeal of treasuries.

A report on producer price inflation is likely to attract some attention on Tuesday, although traders may be reluctant to continue making significant moves ahead of the Fed announcement.

Beware the Ides of March

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