Bond yields rise slightly ahead of Fed rates decision

Bond yields ticked up Wednesday morning ahead of the Federal Reserve’s decision on interest rates, with investors expecting the central bank to keep borrowing costs steady.

The 10-year U.S. Treasury bond yield was trading at more than 5.02 percent as of midmorning, up by roughly 3 basis points from closing time Tuesday. The note dipped below 5 percent last week for the first time since Sep. 23.

The yield on the 30-year U.S. Treasury bond , meanwhile, was up by about 1.5 basis points from Tuesday. The note was trading at roughly 5.32 percent, after topping 5.33 percent earlier in the morning.

Bond yields spiked throughout the summer and early fall due to mounting government debt and rising oil prices .

Officials on the Federal Open Market Committee (FOMC) will release its decision on interest rates at 2 p.m. EDT on Wednesday, six weeks after it hiked rates by a quarter point to fight inflation.

Investors expect the FOMC to hold rates steady at a range of 3.75 percent to 4 percent, despite inflation rising from 3.4 percent in August to 3.7 percent in September , according to the consumer price index .

Traders are pricing in a 90.6 percent chance of the central bank holding rates Wednesday, according to the CME FedWatch tool .

“The Federal Reserve has resumed policy tightening,” said Seema Shah, the chief global strategist at Principal Asset Management, this week in a statement.

“However, because policymakers are responding primarily to energy driven inflation pressures and currency dynamics rather than a materially overheating economy, this is likely to be a relatively shallow tightening cycle,” she added.

After Wednesday, the FOMC will gather once more this year, in early December. Roughly three-fourths of economists CNBC recently surveyed expect policymakers to hike rates at that meeting.