Treasury yields rise as Wall Street awaits Fed interest rate decision

U.S. Treasury yields rose Wednesday, with oil prices jumping ahead of the Federal Reserve’s interest rate decision and subsequent press conference with chair Kevin Warsh. 

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — rose more than 3 basis points to 4.641%.

The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, was up more than 4 basis points at 4.324%. The longer-dated 30-year Treasury bond yield gained 2 basis points at 5.116%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

The rate-setting Federal Open Market Committee is expected to leave rates unchanged at the range of 3.5% to 3.75%, with markets instead pricing in a 76% chance of a September hike, according to the CME Group’s FedWatch tool.

Higher energy prices and renewed tensions with Iran have complicated the picture for Fed Chairman Kevin Warsh, despite cooler inflation data.

While Warsh took over a Fed that has seen inflation exceed its 2% target since 2021, the consumer price index — a broad measure of inflation — posted an unexpected decline last month, bringing the annual inflation rate down to 3.5% in June. But in the weeks that followed, oil prices jumped again amid the escalating conflict in the Middle East. 

Energy prices spiked again Wednesday after President Donald Trump told a Fox News reporter that the U.S. will be hitting Iran “hard” in response to the surprise attacks. West Texas Intermediate crude futures advanced 6.9% to trade at $89.88 a barrel.