U.S. Treasury yields climbed on Wednesday morning as markets prepared for the Federal Reserve's interest-rate decision, with most investors betting the central bank will leave borrowing costs unchanged.
By mid-morning, the 10-year Treasury yield was trading a little above 5.02%, roughly three basis points higher than Tuesday's close. The note had slipped below 5% last week for the first time since September 23.
The 30-year Treasury rose about 1.5 basis points from Tuesday, hovering around 5.32% after briefly topping 5.33% earlier in the session.
Yields surged through the summer and early fall as government debt grew and oil prices climbed.
The Federal Open Market Committee will announce its rate decision at 2 p.m. Eastern time on Wednesday, six weeks after a quarter-point hike aimed at curbing inflation.
Market participants expect the FOMC to keep rates steady in the 3.75%-4% band, even though the consumer price index shows inflation rising from 3.4% in August to 3.7% in September.
According to the CME FedWatch tool, traders assign a 90.6% probability that the Fed will hold rates on Wednesday.
"The Federal Reserve has resumed policy tightening," said Seema Shah, chief global strategist at Principal Asset Management.
She added, "However, because policymakers are responding primarily to energy driven inflation pressures and currency dynamics rather than a materially overheating economy, this is likely to be a relatively shallow tightening cycle."
After this meeting, the FOMC will reconvene in early December. About three-quarters of economists surveyed by CNBC anticipate a rate hike at that session.
