Treasury yields near flat as Fed begins monetary policy meeting
U.S. President Donald Trump joins hands with Kevin Warsh (left) as he arrives for Warsh’s swearing-in ceremony to become the next Chairman of the Federal Reserve in the East Room of the White House on May 22, 2026 in Washington, DC.
Anna Money Maker | Getty Images
U.S. Treasury yields were little changed on Tuesday as the Fed’s two-day policy meeting got underway and expectations for inflation and interest rate increases continued to fade.
The yield on the 10-year U.S. Treasury note, the main benchmark for U.S. government debt, fell more than 1 basis point to 4.453%.
The yield on the 2-year Treasury note, which more closely tracks short-term Federal Reserve interest rate policy, rose less than 1 basis point to 4.068%. The yield on the longer-dated 30-year Treasury note fell more than 1 basis point to 4.953%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Treasury yields fell after the announcement of an interim peace deal between Washington and Tehran on Sunday, paving the way for a 60-day extension of the US-Iran ceasefire and reopening of the Strait of Hormuz to all ships.
Arriving at the G7 meeting, President Donald Trump said a peace framework with Iran had been signed and added that the Strait of Hormuz would “fully reopen” without Iranian tolls on Friday. Trump said an official signing ceremony would be held in Geneva on Friday.
Elsewhere, investors are watching the two-day Federal Reserve policy meeting, which begins Tuesday and will be chaired by new chairman Kevin Warsh. The central bank is preparing to keep its benchmark lending rate between 3.50% and 3.75%, depending on the implied prices used. CME’s FedWatch toolTraders, however, withdrew their expectations for interest rate hikes later this year.
“A sustainable solution to the Middle East crisis would alleviate the policy dilemma of major central banks, which are under pressure to raise interest rates to offset the inflationary impact from higher energy prices,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“As a wide range of central banks hold policy meetings this week, the Fed is likely to set the tone for markets.”
Economic data on housing and retail sales for May will also be announced on Wednesday.
— CNBC’s Hugh Leask also contributed to this report.
