Treasury yields are pushed to new highs as the Federal Reserve appears to be set to raise rates

London — The US Treasury yields for five and ten years rose to their highest levels in almost three years on Tuesday, ahead of the widely-anticipated rate hike from the Federal Reserve Board.

The Treasury yield for five years rose to 2.149%, the highest since May 2019. On the other hand, the 10-year yield rose to 2.204%, up 2bps on the day.

Yields for 30 years temporarily reached 2.537%, the highest since August 2019.

The Federal Reserve will end its two-day meeting late Wednesday to deliver a rate hike for the first time in three years, which is likely to be a series of rate hikes to curb inflation.

The urgency surrounding this week’s Fed policy meeting is intensifying as inflation is showing no signs of easing and Russia’s invasion of Ukraine has pushed up oil prices, which could lead to further increases.

Prices in the US money markets will rise by a total of about 7,25 basis points this year.

Janvon Gerich, Chief Strategist at Nordea, said:

“But it’s clear that the US inflation outlook demands more than just a policy tweak. This (rate hike) cycle will be long.”

Headline inflation in the United States has remained around 8%, with producer prices rising at an annual rate of 10% in February, following a similar rise in January, according to Tuesday data.