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Treasury yields were little changed Wednesday morning as traders waited for the release of the minutes from the Federal Reserve’s January meeting.

What’s happening

  • The yield on the 2-year Treasury
    dipped less than 1 basis point to 4.602% from 4.610% on Tuesday. Yields move in the opposite direction to prices.

  • The yield on the 10-year Treasury
    fell less than 1 basis point to 4.269% from 4.276% on Tuesday.

  • The yield on the 30-year Treasury
    was little changed at 4.442% from 4.448% on Tuesday.

What’s driving markets

Traders were eschewing bold positions ahead of the 2 p.m. Eastern time release of the minutes from the Federal Reserve’s policy meeting on Jan. 30-31.

Analysts will be looking at the extent to which the minutes reflect lingering worry about price pressures, given firmer-than-expected inflation and jobs data that have since encouraged Fed officials to push back against a March interest-rate cut.

Fed-funds futures traders are pricing in a 93.5% probability that the Fed will leave interest rates unchanged at between 5.25% and 5.50% on March 20, according to the CME FedWatch tool. The chance of at least a 25-basis-point rate cut by June is seen at 80%. The central bank is mostly expected to deliver at least three quarter-point rate cuts by December.

Treasury will auction $16 billion of 20-year notes at 1 p.m.

What analysts are saying

Any discussions that took place at the Jan. 30-31 FOMC meeting occurred “before anyone knew there was even one month of job growth above 300k in December, thanks to a huge upward revision, let alone two months with another 300k+ increase in January,” said Chris Low, chief economist at FHN Financial. In addition, the meeting was held “before January CPI [consumer-price index] and PPI [producer-price index] surprises sowed seeds of doubt about the inflation outlook in markets.”

“In the meantime, we can anticipate a lot of what is likely to be reported this afternoon because Jay Powell has proven adept at capturing the mood of the committee and communicating it in his press conferences. As a result, we already have a strong indication the minutes will reveal cautious inflation optimism,” Low wrote in a note.

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