Long-term Treasuries trade close to the lowest yields in history ahead of today’s Fed meeting. 30-year bonds trade below 3% again today. 10s dipped below a 2.5% yield earlier today and now trade at 2.53% while the short-end of the curve trades at a mid-point of zero.
Long-term yields are pricing in odds of further moves by the Fed to buy bonds, most likely mortgage-backed securities, to help free-up mortgage finance.
The dollar has absorbed this notion and driven the dollar 13 cents lower in less than two weeks. The surprise would be that the Fed refrains from addressing quantitative ease. this would prompt short-covering in the dollar and a spike higher in long-term yields.