U.S. Treasury yields increased slightly on December 17, as investors awaited key economic data before the Federal Reserve's upcoming interest rate decision.
At 4:45 a.m. ET, the yield on the 10-year Treasury rose by over two basis points to 4.4205%, while the 2-year Treasury yield also climbed more than two basis points to 4.2721%.
Investors are focused on the latest economic indicators, with U.S. retail sales figures for November scheduled for release. This data is expected to offer insights into consumer spending trends. Following this, building permit and housing starts data will be released on December 18, leading up to the Fed's interest rate announcement on the same day.
A reduction in rates is widely anticipated, with traders estimating a greater than 95% likelihood of a 25-basis-point cut, according to CME Group's FedWatch tool. This would mark the third consecutive reduction, following cuts of 50 basis points in September and 25 basis points in November.
Market participants will also be attentive to the post-meeting press conference with Fed Chairman Jerome Powell, as well as any guidance from the central bank regarding economic and interest rate projections, which are updated quarterly.
This meeting follows a recent quarter-point rate cut by the European Central Bank, marking its fourth reduction of the year. The Bank of England is also expected to announce its rate decision later this week.