Treasuries Drop as Focus Shifts to Fed’s Plan for Higher Rates

Treasuries retreated following the biggest one-day gain in short-term notes since 2009 as traders deemed yields had gotten too low given that the Federal Reserve is still forecast to raise interest rates this year.

Two-year note yields rose after Wednesday’s rally had sent them further below projected year-end levels for the federal funds rate. While central-bank policy makers want to see clearer signs inflation is accelerating before moving to a less-stimulative monetary policy, a rate increase remains on the horizon as the labor market strengthens.