Bond Report: Treasurys hold their ground as Wall Street awaits interest-rate decision from Fed

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U.S. Treasurys were little changed on Wednesday as investors awaited a key policy decision from the Federal Reserve later in the afternoon that could determine the near-term outlook for the bond market.

The 10-year Treasury note yield TMUBMUSD10Y, -0.09% was 0.6 basis point lower at 2.953%. The 2-year note yield TMUBMUSD02Y, +0.32%  added 0.2 basis point to 2.541%, while the 30-year bond yield TMUBMUSD30Y, -0.25% slipped 0.7 basis point to 3.086%.

Bond prices move in the opposite direction of yields.

See: Fed goal is to signal an ‘unhurried’ pace of interest-rate hikes

Traders are expecting the Fed to raise the fed-funds rate by a quarter percentage point to a range of 1.75% to 2.00%, marking its second increase in 2018 and its seventh since the commencement of a path of normalization for the central bank since 2015. Market participants will chiefly focus on changes to the policy statement, the projections for interest rates, as gauged by a plot of projections for futures interest rate increases by policy makers known as the dot plot.

Read: 5 challenging questions Fed chief Powell may encounter

The Fed policy decision is slated for 2 p.m. Eastern Time, with a news conference by Fed Chairman Jerome Powell set for a half-hour later.

Also see: Here’s one rate the Fed won’t raise by a quarter-point

On Tuesday, Treasurys were finished the session mostly flat after North Korea’s Kim Jong Un and President Donald Trump signed an agreement saying North Korea would “complete denuclearization of the Korean Peninsula”—although the two leaders provided few details for how that would proceed. The market also digested some $14 billion of 30-year paper on Tuesday, with investors saying that the auction reflected healthy appetite for Treasurys.

Market participants largely shrugged off the Labor Department’s latest release on consumer prices, which came in line with expectations but showing the fastest rate of increase in six years, supporting a rate increase by the Fed, market participants said.

Beyond the Fed report, investors will watch data on producer prices for May due at 8:30 a.m.

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