Treasury Yields Rising Ahead of FOMC Meeting, First Positive Move In 3 Days

Treasuries fell, pushing the 10-year yield up from near a two-month low, before the Federal Reserve begins a two-day meeting tomorrow and the U.S. sells a combined $111 billion of notes and floating-rate debt this week.

The benchmark 10-year rate rose for the first time in three days before a report economists said will show a gauge of home sales declined for a second month in December. The 10-year note yield will rise to 3.37 percent by Dec. 31, according to the weighted average estimate in a Bloomberg survey of analysts. The Fed decided in December to reduce its monthly bond buying to $75 billion from $85 billion, starting in January.

“I’m kind of cautious of Treasuries at these levels because they may be a little bit too rich,” said Kei Katayama, a Tokyo-based money manager at Daiwa SB Investments Ltd., which oversees the equivalent of $48.2 billion. “The basic fundamentals of the U.S. are still healthy. At some stage, I’m expecting some pickup in the yield.”

Bloomberg

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