Treasuries End Higher on Rate Hikes
Short covering and month-end adjustments underscored the rally ahead of the Federal Open Markets Committee meeting. The Fed's policy-making arm raised its target for the federal funds rate by 25 basis points to 1.25%. The 25-basis-point rate hike was widely discounted and many see that rate headed to 2.25% by the end of this year or early next year.
The committee said it would maintain an accommodative stance that will provide "measured" rate hikes in the future. Still, they indicated they will respond to economic changes to maintain price stability. They also said the recent rise in inflation was transitory. The curve, nonetheless, steepened, as the front end breath a sigh of relief.
Traders look ahead to Friday's Nonfarm Payroll for clues about future Fed moves.