The yield on the US 10-year Treasury note steadied around 4.62% on Wednesday as investors awaited the Federal Reserve’s upcoming policy decision, with policymakers widely expected to leave interest rates unchanged.
However, markets continue to price in about a one-third chance of a 25-basis-point rate hike, reflecting an unusually high level of uncertainty this close to a policy meeting compared with recent years.
Traders also assign roughly an 80% probability to a rate increase in September, reinforcing expectations that borrowing costs could remain elevated.
Investors also monitored rebounding oil prices and renewed inflation concerns after fresh hostilities flared in the Middle East. The US military said it had successfully intercepted what it described as a surprise Iranian attack targeting US troops stationed across the Middle East, reigniting regional tensions.