The 10-year Treasury yield is at a new high before the Fed’s decision

The 10-year-old U.S. leader was speaking ahead of a press conference with Federal Reserve Chairman Jerome Powell at the central bank’s two-day policy meeting. Treasury yields peaked at 1.64% early Wednesday morning.

Yield on the benchmark 10-year Treasury note rose 1.644% at 6 a.m. ET. Yields on 30-year Treasury bonds have reached 2.395%. Yield moves upwards.

The two-day policy meeting of the Federal Open Market Committee is scheduled to end at 2 p.m. ET, followed by a press conference with Powell.

The Fed will release new economic and interest rate forecasts, which could indicate that Fed officials expect to raise rates by 2023 or even earlier. The central bank is expected to embrace strong growth, which should put the Fed’s simple policies in the spotlight, especially given the new $ 1.9 trillion in federal stimulus spending.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, told CNBC’s “Squawk Europe X Europe” on Wednesday morning that if the Fed signals it will weaken rising bond yields at this level.

Amid concerns of a possible rise in inflation, recent 10-year Treasury yields have risen sharply as economies reopen and the coronavirus epidemic returns. The 10-year yield has risen half a per cent since the end of January, up from 1.6 per cent in the previous two weeks.

However, Shepherds revealed that this “in real terms is still close to zero.”

Shepherdson believed that while Powell would once again push through some fears of market inflation, he suggested that the Fed chairman would not talk about tapping his bond-buying program at a press conference on Wednesday.

He explained that this is because “the Fed will start talking about tapping, then the yield will immediately rocket because that’s what the markets do – you give the markets an inch and they take the yard – especially in the treasury at the moment.”

“So I think the Fed can’t really make these things as weak as they can be,” he added.

Shepherds said the lack of these suggestions from the Fed when a policy change could occur was “justified because this recovery is still predictable.”

Meanwhile, data on the number of building permits and new housing construction projects launched in February is due to come out at 8:30 a.m. Wednesday.

The 9 35 billion bill of 119 days will be auctioned on Wednesday.

Maggie Fitzgerald of CNBC contributed to this report.