U.S. Treasury yields were lower on Monday as investors anticipated the Federal Reserve’s interest rate decision later this week, as well as a key inflation reading, which will shed light on the impact of tariffs on the economy.
At 4:39 a.m. ET, the 10-year Treasury yield was down just over one basis point to 4.371%. The 2-year yield was less than 1 basis point lower to 3.912%, while the 30-year yield fell one basis point to 4.911%.
One basis point is equal to 0.01%. Yields and prices move in opposite directions.
It’s a busy week ahead for investors, with the Fed set to have its two-day policy meeting, concluding on Wednesday, when the interest rate decision will be announced.
Traders are pricing in a 97% chance that interest rates will be held steady at their current target range of 4.25% to 4.5%, according to the CME FedWatch Tool. They will also look for clues on whether rate cuts will be coming later in the year.
The personal consumption expenditures index — the Fed’s preferred inflation gauge — is due on Thursday and will reveal the effects of tariffs on inflation. The report is forecast to show inflation increasing to 2.4% from 2.3% year over year, according to FactSet, and to 0.31% from 0.14%, on a monthly basis.
Other economic data coming out this week includes the Job Openings and Labor Turnover Survey on Tuesday, ADP’s private payrolls report on Wednesday, weekly initial jobless claims on Thursday, and July’s jobs report on Friday.
On the tariff front, the U.S. and European Union announced Sunday that they’ve reached a trade agreement which includes 15% tariffs on EU goods imported to the U.S. That’s down from the 30% levy that the EU would have been hit with on the approaching Aug. 1 deadline.
