U.S. 10 Year Treasury Yield Hit 2.5%

Benchmark U.S. 10-Year Treasury yields was trading higher on Monday as investors are waiting for Federal Reserve meeting on Wednesday. The yield on 10-year Treasury note hit 2.53 percent in the early trading, the highest level since 2014. It is currently trading at around 2.4831 percent. While the 30-year bond yield also traded higher at 3.162 percent. Bond price goes down when yields go up.

The bond market had begun selloff since Trump won the election and investors expected higher inflation under his policies, including tax cut and less regulation for the financial institutions.

Investors also expected higher borrowing cost in December. The Federal Reserve Open Market will hold a meeting on Wednesday and decide whether to raise interest rates. The probability of a rate hike this week is above 95 percent, according to the CME Group’s FedWatch tool.

The supply of new bond also weighted the market. On Monday, the Treasury Department auctioned $20 billion in 10-year notes at a yield of 2.485 percent and $24 billion in 3-year notes at 1.452 percent. It will auction $12 billion in 30-year notes on Tuesday.

“My view is that selling pressure is coming ahead of the Treasury refunding and prior to the Fed’s rate decision on Wednesday. At the moment, international investors seem to have a relatively low appetite for Treasuries due political uncertainty,” said Tom di Galoma, managing director for Treasury trading at Seaport Global.

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