Treasury Yields Hover Above 5% as Fed Decision Looms

The yield on the 10-year Treasury note hovered above 5% as investors awaited the outcome of the Federal Reserve's two-day meeting.

At 4:30 a.m. ET, the benchmark 10-year Treasury yield was flat at 5.004%, while yields on the longer-dated 20- and 30-year Treasury notes were unchanged at 5.409% and 5.372%, respectively.

The Fed's Federal Open Market Committee is set to announce its latest monetary policy decision at 2 p.m. ET on Wednesday, with investors pricing in a roughly 92.5% chance of a quarter-point hike, according to the CME FedWatch tool.

Brent Wilsey, chief investment officer at San Diego-based Wilsey Asset Management, warned that a hold from the Fed could have ramifications for investors and the central bank, saying 'If the Federal Reserve were to keep rates steady Wednesday, that could surprise stocks, and surprises are rarely received well in markets.'

J Jonathan Pryor, co-head of FX dealing at Marex, said the Fed is 'moving into a new phase of monetary policy' as it tackles inflation, predominantly supply-side inflation.