Treasury yields dip following previous session's surge; investors await Fed's Beige Book

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  • The yield on the benchmark 10-year Treasury note traded 3 basis points lower at 3.311% at 6 a.m. ET, after hitting its highest level since mid-June during Tuesday's session at 3.353%.
  • The yield on the 30-year Treasury bond was down by 1 basis point at 3.47%.

U.S. Treasury yields ticked lower Wednesday following the previous day's surge, as investors looked ahead to new economic analysis from the Federal Reserve.

The yield on the benchmark 10-year Treasury note traded 4 basis points lower at 3.294% at 10:00 a.m. ET, after hitting its highest level since mid-June during Tuesday's session at 3.353%. The yield on the 30-year Treasury bond was down by 3 basis points at 3.448%.

The yield on the 2-year Treasury traded nearly 3 basis points lower at 3.474%. The short-term note rose to 3.55% last week, reaching its highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.

Tuesday's climb in yields followed upbeat data releases. The August non-manufacturing PMI from the Institute for Supply Management was registered at 56.9, an increase on the previous month and better than many economists' expectations of 55.5.

Investors are looking out for the release of the Fed's Beige Book on Wednesday, a qualitative survey of economic conditions based on data from 12 district banks. Its results are used by the Federal Open Market Committee as part of its policy decision making.

Data on the U.S.'s exports, imports and trade balance for July is also out Wednesday, as well as figures on the mortgage market index and mortgage applications for early September.

Markets remain on the lookout for signs of the Fed's next steps and whether it will deploy another interest hike to counter rapidly rising inflation at a time of economic slowdown and mounting recession fears.

Tuesday's positive figures may suggest that the Fed could have room to further raise rates without doing subsequent damage to the U.S. economy.

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