Treasury Yields Rise as Uncertainty Over Fed Interest Rate Policy Spreads

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Treasury yields rose on Wednesday after declining for two consecutive days at the start of the week, as uncertainty over future interest rate hikes continues and stock futures pull back.

The yield on the benchmark 10-year Treasury was last higher by around 16 basis points at 3.779%. The policy-sensitive 2-year Treasury climbed 7 basis points to 4.171%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

On Tuesday, the Bureau of Labor Statistics reported over 1 million fewer job openings than markets anticipated for August. That could indicate that the labor gap, which previously reflected almost double the amount of job openings than available workers, is starting to narrow.

As the high demand for workers has pushed up salaries, and therefore been a major contributor to rising inflation, the change could affect future Federal Reserve policy.

The central bank has been hiking interest rates and said it would continue to do so to push back against persistent inflation. That has sparked fears of a recession among investors who believe the hikes are being implemented too quickly. Some analysts now argue that the new labor market data could lead the Fed to slow down rate hikes.

Major U.S. stock indexes pulled back on Wednesday after rallying at the start of the week, with the S&P 500 noting its biggest two-day rise since 2020.

A slew of economic data is expected later on Wednesday, including further insights into economic growth through the release of the Purchasing Managers' Index for non-manufacturing sectors.

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