Government bond yields remain stable as investors assess the outlook for monetary policy

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U.S. Treasury bond yields were little changed Monday as investors pondered the Federal Reserve’s next interest rate decision and considered the outlook for the broader economy.

At 5:27 am ET, the yield on the benchmark 10-year Treasury was up just 1 basis point to 3.497%. The yield on 2-year government bonds remained stable at 4.185%.

Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.

Investors weighed in on future monetary policy decisions as uncertainty over whether the Fed would raise interest rates by 25 or 50 basis points at its next meeting on January 31 and February 1.

In recent weeks, Fed speakers hinted they would consider slowing rate hikes to 25 basis points. Some, including Fed Governor Christopher Waller, have flatly said they would favor a smaller hike.

It’s because both wholesale and consumer inflation fell on a monthly basis for December.

Many investors hope that the central bank will slow or even halt interest rate hikes this year. The pace of rate hikes announced by the Fed in its fight against high inflation has raised concerns about a possible recession.

No major economic figures are expected on Monday. As the week progresses, investors will follow S&P Global’s Purchasing Managers Index report on Tuesday, GDP data on Thursday and the Personal Consumption Price Index on Friday.

The latter is one of the Fed’s favorite inflation gauges and could therefore determine the central bank’s next policy moves.



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