TREASURIES-U.S. two-year yield hits almost 15-year high ahead of Fed

Credit: REUTERS/Dado Ruvic

LONDON, Sept 20 (Reuters) - The yield on the benchmark two-year U.S. Treasury note neared its highest in almost 15 years on Tuesday, ahead of Wednesday's Federal Reserve policy announcement, when a rate hike of at least 75 basis points is widely expected.

The two-year yield, which is highly sensitive to shifts in expectations for monetary policy, was last up 2 basis points on the day after earlier hitting 3.992%, its highest since October 2007. The last time the two-year yield broke above 4% was Oct. 18, 2007. US2YT=RR

The closely watched gap between two-year and 10-year yields had earlier reached a discount of as much as 47.5 basis points on Tuesday, approaching its most negative since Aug. 10 when it hit a discount of 56 basis points. US2US10=TWEB

This inversion of two- and 10-year yields has often been seen as a reliable predictor of a recession in one to two years' time.

The Federal Reserve is scheduled to announce its latest policy decision on Wednesday. Money markets are fully pricing in a 75 basis point rate hike, with just under a 20% chance of a larger full-point rate rise, according to Refinitiv data.

(Reporting by Samuel Indyk Editing by Nick Zieminski)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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