coronavirus

Treasury Yields Fall With Fed Policy Meeting Underway

U.S. Treasury yields fell Tuesday with the Federal Reserve two-day policy meeting underway.

The yield on the benchmark 10-year Treasury note fell 4 basis points to 1.236% by 4:15 p.m. ET. The yield on the 30-year Treasury bond dipped 3.7 basis points to 1.888%. Yields move inversely to prices and 1 basis point equals 0.01 percentage points.

The Federal Open Market Committee two-day meeting begins Tuesday. A statement will then be released after meeting concludes on Wednesday, followed by Chairman Jerome Powell's news conference.

Investors are awaiting insight into where the central bank stands on monetary policy.

"I don't think we're going to get any big surprises from [the Fed meeting]. Perhaps it allows some of the uncertainty to drift away a little bit. Maybe you'll see yields go up a basis point or two, but I'm not so sure we'll see any big moves," Victoria Fernandez, Crossmark Global Investments' chief market strategist, said.

Mobeen Tahir, associate director of research at WisdomTree, told CNBC's "Squawk Box Europe" on Tuesday that his firm believed the "narrative from central banks is evolving but not evolving fast enough."

Tahir said this has three major implications: firstly, that inflation could be higher for longer.

The International Monetary Fund on Tuesday warned inflationary pressures could prove to be more persistent, pushing central banks to take pre-emptive action.

Secondly, he said "volatility could be triggered by changes in monetary policy, as markets are waiting and reacting to every single announcement that the Federal Reserve makes."

Thirdly, Tahir said that if the Fed were forced to "slam the brakes" on accommodative on monetary policy to control inflation, that could result in a "taper tantrum."

The so-called taper tantrum occurred in 2013 after Fed Chairman Ben Bernanke hinted at the tapering of asset purchases, prompting a spike in bonds yields.

Copyright CNBCs - CNBC
Contact Us