News

Treasury yields rise as investors look to first Fed meeting of the year

A specialist trader works at his post on the floor at the New York Stock Exchange (NYSE) in New York City.
Brendan McDermid | Reuters

U.S. Treasury yields rose on Tuesday as investors looked to the Federal's Reserve's first meeting of the year where interest rate decisions will be made.

The 10-year Treasury yield increased 1 basis point to 4.538%, while the 2-year Treasury yield rose less than 1 basis point to 4.199%.

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

Investors are anticipating the latest Federal Open Market Committee meeting, which will take place over Tuesday and Wednesday, and will watch closely as the Fed announces its latest monetary policy decision.

Newly inaugurated U.S. President Donald Trump applied pressure, saying that he will "demand that interest rates drop immediately," during a key note address at the World Economic Forum in Davos, Switzerland, last week.

However, expectations for a rate cut remain low, with the Fed signaling in its last December meeting that they are penciling in only two rate cuts in 2025.

Traders are pricing in a more than 99% chance that interest rates will remain unchanged, according to the CME Group's FedWatch Tool.

Treasuries tumbled on Monday after investors looked to buy safe-haven assets amid a huge stock market sell-off. That was due to the emergence of Chinese AI startup DeepSeek, which released its own open-source AI model that is outperforming OpenAI, and which they said took less than $6 million to build.

That caused investors to question the billions of dollars spent on training and building AI models, with the Nasdaq Composite and S&P 500 plunging late on Monday.

Investors will also await the personal consumption expenditures price index — the Fed's preferred inflation gauge — on Friday, which will offer insights into the health of the U.S. economy.

Copyright CNBC
Contact Us