Treasuries Close Modestly Lower After Fed Rate Hike

(RTTNews) - Treasuries saw considerable volatility on the heels of the Federal Reserve's monetary policy announcement on Wednesday before ending the session modestly lower.

Bond prices bounced back and forth across the unchanged line after the Fed decision. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.9 basis points to 2.287 percent.

With the uptick, the ten-year yield closed higher for the third straight session, climbing further off the one-month closing low set last Friday.

The lower close by treasuries came after the Federal Reserve announced its widely expected decision to raise interest rates by 25 basis points.

Citing the economic outlook and the time it takes for policy actions to take effect, the Fed raised the target range for the federal funds rate to 0.25 to 0.50 percent.

The Fed said monetary policy remains accommodative even after the rate hike, supporting further improvement in labor market conditions and a return to 2 percent inflation.

The central bank said economic conditions are expected to evolve in a manner that will warrant only gradual increases in rates but noted the actual path will the depend on incoming economic data.

"In short, everything is data dependent," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "And, with the full employment part of its mandate already largely achieved, the data the Fed will be watching most closely is inflation."

Reaction to the Fed decision may continue to impact trading on Thursday, although reports on weekly jobless claims and Philadelphia-area manufacturing activity may also attract attention.