Treasury yields are little changed as investors await Fed decision

U.S. Treasury yields were little changed on Wednesday as investors awaited the outcome of what could be Jerome Powell’s final policy meeting as Federal Reserve chair.

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — was up less than 1 basis point at 4.362%. The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, was higher by more than 1 basis point at 3.859%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

The Fed’s two-day monetary policy meeting wraps up on Wednesday, when outgoing Fed chair Powell and the Federal Open Market Committee are widely expected to keep interest rates on hold at the current 3.50% to 3.75% level. 

He is expected to lead his fellow policymakers toward another cautious pause, with stubborn inflation and a resilient labor market leaving little room for interest rate cuts. 

“On the dual mandate, they’d say we’re roughly at a stable labor market,” Roger Ferguson, an economist and former vice chair at the Fed, told CNBC. “On the inflation side of the mandate, [there’s] a lot more work to be done with a sticky 3% [inflation rate], and I hope they argue, ‘we’re going to sit tight for a little while to see how this all plays out.'” 

Kevin Warsh, Powell’s successor, appears on track to take the helm at the central bank. Sen. Thom Tillis said Sunday he is willing to end his blockade of Warsh’s nomination after the U.S. Department of Justice dropped its criminal investigation into current chair Powell.

The Senate Banking Committee is set to vote on his confirmation on Wednesday, and the full Senate could take it up shortly after.

With Tillis’s support, the confirmation of President Donald Trump’s pick to lead the Fed is all but assured.

— CNBC’s Jeff Cox and Matt Peterson also contributed to this report.