US Treasury yields whipsaw on Fed rate hike
Washington (Dec 16) US Treasury yields traded in a back-and-forth range Wednesday after the Federal Reserve raised interest rates.
The decision, given the official stamp of approval from the Federal Open Market Committee, marks the first increase since the panel pushed the key rate to 5.25 percent on June 29, 2006.
"Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic conditions, the committee decided to raise the target range for the federal funds rate to ¼ to ½ percent," the FOMC's post-meeting statement said. "The stance of monetary policy remains accommodative after this increase, thereby supporting further improvements in labor market conditions and a return to 2 percent inflation."
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Benchmark 10-year note yields rose to trade at 2.31 percent immediately after the announcement, before trading at 2.2658 percent, while 2-year notes yielded more than 1 percent, before holding at about 0.9721 percent.
Longer-dated 30-year bonds yielded as much as 3.0356 percent after the decision, but fell back to 2.9826 percent shortly after. Five-year yields hit a session high of 1.7772 percent, before falling back to 1.7158 percent.
Nonetheless, FOMC officials made it excessively clear in post-meeting documents that the pace of increases will be gradual and dependent on the quality of economic data.
Investors now await a news conference with Fed Chair Janet Yellen, scheduled for 2:30 p.m. ET.