As investors anticipate the Fed's preferred measure of inflation, treasury yields decline.

On Wednesday, U.S. Treasury yields were lower due to investors' anticipation of a crucial inflation reading and their consideration of the Federal Reserve's November meeting minutes.

The 10-year Treasury yield decreased by more than 4 basis points to 4.261%, while the 2-year Treasury yield dropped by 3 basis points to 4.2210% at 6:06 a.m. ET.

Yields and prices move in opposite directions, with one basis point equal to 0.01%.

Economic data will be released on Wednesday before Thanksgiving, when markets will be closed.

The Federal Reserve's preferred inflation gauge, the October personal spending and income release, containing the personal consumption expenditures (PCE), is eagerly anticipated by investors. This data will be released at 10 a.m. ET on Wednesday.

According to a Dow Jones estimate, the core reading, which excludes food and energy prices, is predicted to increase by 2.8% year-over-year, as stated by economists.

The Fed's meeting minutes from November were released on Tuesday, with officials stating that inflation is decreasing and that interest rate cuts will occur gradually.

The minutes stated that if inflation continued to decrease sustainably to 2 percent and the economy remained near full employment, participants anticipated that it would be appropriate to gradually shift to a more neutral stance of monetary policy over time.

According to the CME Group's FedWatch Tool, traders are predicting a 66% chance that the Fed will reduce interest rates by a quarter point during its next December meeting, while 33% anticipate no change.

President-elect Donald Trump's appointment of Scott Bessent as Treasury secretary is reassuring investors by prioritizing market stability as a fiscal conservative.