US Treasury bond yields are showing a slight decline, while investors are waiting for the Fed meeting, the results of which will be announced on Wednesday.
The yield on 10-year Treasury bonds fell by 2.1 basis points, reaching 1.726%, while the yield on 30-year bonds was 2.043% (-1.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, rose by 1.3 basis points to 1.006%.
As for the Fed meeting, market participants hope to get hints about how much the central bank will raise interest rates this year and when this process will begin. Goldman Sachs economists said that a further rise in US inflation could force the Fed to become even more hawkish in tightening policy than economists expect. "According to our baseline scenario, the Fed will raise rates four times this year. But there is a risk that the Fed will gradually tighten policy at each meeting until it sees an improvement in the inflation situation," Goldman Sachs added.
Meanwhile, Berenberg economists also forecast four rate hikes of 0.25% in 2022, but do not rule out the possibility of five rate hikes against the background of very strong nominal and real demand in the United States.
As for the US data, today at 14:45 GMT manufacturing PMI (expected to decline to 56.7 from 57.7 in December) and services PMI (projected to fall to 55.0 from 57.6) for January will be released.