US Treasury Yields take a breather after recent rally, Fed’s policy in focus

  • US Treasury Yields hit a pause after a gigantic rally to near 5.04%.
  • Warnings on surging AI investment force rally in US bond yields to hit a pause.
  • The Fed is almost certain to raise interest rates later in the day.

United States (US) Treasury Yields have hit a pause after posting a fresh multi-year high on Tuesday ahead of the Federal Reserve’s (Fed) monetary policy announcement later in the day.

In the Asian trading session on Wednesday, 10-year US Treasury Yields are 0.5% down to near 4.98%, correcting from its historic highs of 4.04% posted the previous day.

US Treasury Yields retreat as Anthropic CEO and co-founder Dario Amodei warns against surging global investment in Artificial Intelligence (AI) infrastructure. “I won't lie to you – there are real dangers," Amodei said and added, "And I think for too long the industry lied to people about the fact that this technology had risks."

This statement has also led to a significant decline in semiconductor and AI chipmakers stocks. The issuance of a significant amount of US bonds by hyperscalers to fund gigantic AI investment was also one of key driving factor behind surging Treasury Yields.

According to Goldman Sachs, five major hyperscalers are expected to issue about $250 billion of bonds in 2026 and another $400 billion in 2027. This is more than double the investment amount of $108 billion made for the whole of 2025, Reuters reported.

Broadly, the outlook of US Treasury Yields remains firm on expectations that the Federal Reserve (Fed) will continue on the monetary tightening path even after hiking interest rates by 25 basis points (bps) to 3.75%-4.00% later in the day.

Strategists at BNY said that “while we expect a hike on Wednesday, and probably one more this year, we think the path to even higher policy rates is strewn with potential impediments to significantly tighter policy.” “The nearly 100bp of hikes (equivalent to four hikes of the standard 25bp increment) currently priced in will be realized,” but they caution that, although they are “not ready to see shorter-maturity yields fall any time soon,” these yields “may ultimately prove to be ahead of themselves,” BNY added.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

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Next release: Wed Sep 16, 2026 18:00

Frequency: Irregular

Consensus: 4%

Previous: 3.75%

Source: Federal Reserve

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