U.S. Treasury yields drop ahead of data releases, Fed meeting

U.S. Treasury yields declined Tuesday ahead of the Federal Reserve’s November meeting and as investors awaited key jobs and manufacturing growth data.

The yield on the benchmark 10-year Treasury fell back below the 4% mark and was last trading at around 3.9881% at 5 a.m. ET, after falling by around 9 basis points. The 2-year Treasury yield declined by around 6 basis points to 4.4369%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

JOLTs job openings data for September and ISM’s October manufacturing PMI (purchasing managers’ index) are due to be released on Tuesday. Traders will be scanning the data for hints about the state of the U.S. economy and the potential easing of inflationary pressures.

The large gap between job openings and available workers was one of the key drivers of inflation in the U.S. August’s job openings figures suggested the gap may be narrowing and investors will be watching closely to see if this trend has continued.

Meanwhile, the ISM manufacturing PMI will show whether factory activity has increased or decreased throughout October. September’s figures suggested the sector was close to contracting and reflected the slowest growth levels since 2020.

Concern about the Federal Reserve’s series of interest rate hikes leading to an economic slowdown has been spreading among traders. All eyes are therefore on the central bank’s meeting which starts Tuesday.

Markets are widely expecting the fourth consecutive 75 basis point interest rate hike from the Federal Reserve and are hoping to gain some clarity about whether the central bank will slow the pace of rate hikes as the year ends.