Credit: REUTERS/Dado RuvicLONDON, 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)
((Samuel.Indyk@thomsonreuters.com))
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