U.S. Treasury yields held steady on Wednesday as investors braced themselves for the January consumer inflation report.
At 3:45 a.m. ET, the 10-year Treasury yield was up less than one basis point to 4.5454%, while the 2-year Treasury yield was up just over one basis point to 4.3002%.
Yields and prices move in opposite directions and one basis point equals 0.01%
Treasurys
Investors are keenly awaiting the consumer price index report for January, which will be published at 8:30 a.m. ET. The reading is expected to come in above the Federal Reserve’s 2% target. Headline inflation is expected to have grown 0.3% from the prior month and 2.9% on a yearly basis, according to Dow Jones.
The core inflation reading, which excludes volatile food and energy prices, is projected to be at 0.3% and 3.1%, respectively. The producer price index will be published on Thursday.
Some economists have emphasized that although certain categories may see disinflation, Trump’s tariffs may offset that.
On Tuesday, Fed Chairman Jerome Powell appeared before the Senate Banking Committee, and said the central bank “doesn’t need to be in a hurry” to cut interest rates further.
“We know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment,” Powell said.
Powell will again speak before the House Financial Services Committee on Wednesday.
Investors are also grappling with the potential impact of tariffs, as U.S. President Donald Trump signed an order on Monday to add a 25% duty on steel and aluminum imports.