Treasury yields keep higher to start the session

10-year Treasury yields up 1.6 bps to 1.638%

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The jump back above 1.60% yesterday ended up being the key story in the market and we are seeing bond sellers keep up the pressure slightly to start European trading.

10-year yields ticked up to a high of 1.641% and is holding thereabouts to start the session as the market gears towards the FOMC meeting later today.

Nothing has really changed in terms of key developments in the past few weeks so this could be some light positioning ahead of the Fed, though there is a strong consensus that Powell & co. will offer up very little for traders to work with this time around.

I reckon price action in the aftermath of the Fed will be the more interesting thing to focus on. If 10-year yields can hold back within its previous range of 1.60% to 1.75%, that may set the stage for the next leg higher if economic data is supportive.

That will put a lot of attention on the PCE inflation data on Friday as such.

But move back below 1.60%, then it is pretty much back to the drawing board as the reflation narrative continues to take a bit of a pause in the Treasuries space.