US Treasury Yields at 3-Month High

The yield on the US 10-year Treasury note hovered near 4.2% on Wednesday, its highest level in three months, as markets braced for the FOMC’s policy decision later in the day.

While the Fed is widely expected to deliver a third consecutive 25 bps rate cut, attention is firmly on updated projections and guidance for 2026.

Traders have become less confident that the easing cycle will extend into 2026, given still-elevated inflation and persistent divisions among policymakers.

Headline PCE inflation rose to 2.8% in September, nearly a full percentage point above target.

In September, the Fed projected only one rate cut in 2026, whereas markets currently price in roughly two cuts next year.

Adding to uncertainty are concerns about the independence of the next Fed Chair, who will replace Jerome Powell in May, which have also weighed on the bond market.

Meanwhile, the 30-year Treasury yield climbed above 4.8%, its highest level since early September.