US Treasury yields climb as minutes. highlight Fed wait-and-see mode

• US 10-year yield rises to 4.473% as investors digest the Fed's concerns about inflation and tariffs.
• $70B 5-year auction clears at 4.071%, slightly below recent average, ahead of Thursday's 7-year sale.
• Weak Richmond Fed data underscores economic slowdown; all eyes on GDP and Core PCE later this week.

US Treasury yields climbed on Wednesday following the release of the latest Federal Reserve meeting minutes from May 6-7, which revealed the US central bank's concerns about tariffs and their impact on inflation and economic activity.

Treasury yields rise across curve after Fed signals caution; markets price in 45 bps in cuts by year-end

The latest Federal Reserve minutes revealed that officials support a cautious approach to rate adjustments amid elevated economic uncertainty and rising risks of stagflation.

In response, money markets priced 45 basis points of rate cuts by the end of the year.

The US 2-year T-note yield, the most sensitive to interest rate changes, rises one and a half basis points (bps) to 3.994%.

The US 10-year Treasury note yield surges three basis points to 4.473%, as market participants remain skeptical that the Fed will lower rates in the first half of the year.

The US 5-year note $70 billion auction reached a high yield of 4.071%, surpassing the previous auction's 3.995% yield, although it remained below the six-auction average of 4.204%. On Thursday, the US Treasury is expected to offer $44 billion in 7-year T-notes.

US economic data was scarce, although the Richmond Fed reported that manufacturing and service activity continued to show an ongoing economic slowdown in both sectors.

Ahead this week, investors are eyeing the release of GDP and labor indicators on Thursday. By Friday, the release of the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, is expected to dip slightly.

US 10-year yield vs. Fed funds rate December 2025 easing expectations