Fed Decision Looms Large Over US Treasury Yields

US Treasury yields inched higher on Wednesday as Wall Street awaited the Federal Reserve's interest rate decision. The key benchmark for US government borrowing, the 10-year US Treasury note yield, rose over 1 basis point to 4.614%. This slight increase follows a similar rise in the 2-year Treasury note yield, which tracks short-term Federal Reserve interest rate policy and was up over 1 basis point at 4.291%.

The longer-dated 30-year Treasury bond yield remained broadly flat at 5.1%, while markets expect the Fed to leave rates unchanged at the range of 3.5% to 3.75%. According to the CME Group's FedWatch tool, there is a 76% chance of a September hike.

The decision-making process for Fed Chairman Kevin Warsh has been complicated by higher energy prices and renewed tensions with Iran. Despite cooler inflation data, which brought the annual inflation rate down to 3.5% in June, oil prices jumped again amid the escalating conflict in the Middle East.