Treasury yields remained broadly lower Wednesday afternoon after Federal Reserve policy makers raised their main policy rate target by 75 basis points for the first time since November 1994.In a post-meeting press conference, Fed Chairman Jerome Powell told reporters that a 50-basis-point or 75-basis-point hike is on the table for July.
What are yields are doing
The 2-year Treasury note yield
fell to 3.26% from 3.435% late Tuesday, which was its highest level since Nov. 14, 2007, according to Dow Jones Market Data. Wednesday’s drop comes on the heels of the largest eight-day yield rise for the 2-year note since Aug. 14, 1989, as of Tuesday.
The yield on the 10-year Treasury note
dropped to 3.378% from 3.482% on Tuesday, which was the highest level since April 14, 2011. As of Tuesday, the yield had seen its biggest five-day rise since Oct. 14, 2008.
The yield on the 30-year Treasury bond
slipped to 3.377% from 3.432% on Tuesday. Tuesday’s level was the highest since Nov. 2, 2018.
What’s driving the market? As expected, U.S. policy makers lifted the fed funds rate by three quarters of a percentage point, to between 1.5% and 1.75%, a hike of the biggest magnitude in almost 28 years. In a press conference, Fed Chairman Jerome Powell told reporters that policy makers came around to the view that “front-loading” rate hikes was needed, and will be looking for compelling evidence of inflation coming down. While some fear more aggressive action could trigger a recession, the Fed was under pressure to act forcefully after last Friday’s surprise May consumer-price index reading, which showed the annual headline inflation rate surging to a 40-year high of 8.6%. In addition, prices of wholesale goods and services jumped 0.8% in May, Tuesday’s data showed.On Wednesday, the median projection of Fed policy makers is for U.S. inflation, as measured by their preferred gauge, to exceed 5% by the end of 2022 — …