The yield on US Treasury bonds declined slightly, ahead of the start of the two-day Fed meeting, at which further tightening of monetary policy is expected.
The yield on 5-year Treasury bonds fell by 2.1 basis points, reaching 3.662%, while the yield on 30-year bonds was 3.65% (-1.0 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 2.1 basis points to 4.24%, while the yield on 10-year bonds fell to 3.538% (-1.3 basis points). The curve between the 10-year Treasury yield and the 2-year yield remains inverted, sending a warning that the economy may be falling or has already fallen into recession. Now the gap between 10 and 2 year U.S. debt is 70 basis points.
The Fed will announce the results of the first meeting this year on Wednesday. Analysts expect the Fed to slow the pace of rate hikes to 25 basis points. Investors will also be looking to the central bank for guidance on rate policy and its expectations for broader economic developments.
Meanwhile, today investors will focus on data such as S&P/Case-Shiller home price index, Chicago purchasing managers' index and consumer confidence index, which can provide clues about the prospects for the US economy, as well as the impact of high inflation on companies and consumers.