U.S. Treasury yields edged slightly lower on Monday as investors brace for the Federal Reserve's upcoming interest rate decision. The 10-year Treasury yield dipped less than 1 basis point to 4.98%, while the 30-year Treasury bond yield fell 1 basis point to 5.302%. The 2-year Treasury note yield remained nearly unchanged at 4.6752%. Yields and prices move in opposite directions, with one basis point equal to 0.01%.
The focus this week is on the Fed's rate decision scheduled for Wednesday. According to the CME FedWatch Tool, traders are pricing in over a 90% chance that policymakers will keep interest rates steady within the current target range of 3.75% to 4%.
Deutsche Bank analysts highlighted that investors will closely watch Chairman Kevin Warsh's comments following the decision, particularly how the Fed balances elevated inflation and strong growth against recent financial tightening. They noted that the broader message is likely to remain hawkish, with recent inflation data supporting the case for further tightening over time. Warsh is expected to clarify that tight financial conditions do not replace higher policy rates.
In addition to the Fed's decision, investors will monitor the personal consumption expenditures index, the Fed's preferred inflation gauge, set to be released on Thursday. Other key economic data this week includes the ADP Employment Change and durable goods orders for September on Tuesday, weekly initial jobless claims on Thursday, and further employment data on Friday.