US Treasury yields fall ahead of Fed on concern over Russia war

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10-year Treasury yields fell on Wednesday from their highs in just over a decade before the Federal Reserve’s interest rate decision, at a time when concerns about an escalation of the war between Russia and Ukraine modestly boosted debt demand.

* Yields have risen this week as investors are betting the Fed will take a tougher tone, signaling it plans to keep rates high and monetary policy tight as it battles persistent inflation near 40-year highs.

* However, on Wednesday they fell after Russian President Vladimir Putin called up 300,000 reservists to fight in Ukraine and backed a plan to annex parts of the country, hinting to the West that he was willing to use nuclear weapons to defend Russia. .

* Fed Chairman Jerome Powell is expected to maintain that the US central bank remains committed to raising rates even if growth begins to falter.

* “He’s really trying everything he can to make sure the market understands his commitment to lower inflation and this idea that they’re not going to give in at the first sign that the economy is weakening,” said Thomas Simons, an economist at the market. Jefferies Monetary in New York.

* Yields on 10-year notes were trading at 3.542%, after hitting 3.604% on Tuesday, the highest since April 2011. Two-year yields were at 3.965%, after hitting 3.992% on Tuesday, the highest since October 2007.

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