Treasuries Fall as Yellen Strikes Hawkish Tone in Testimony
- Fed chair says waiting too long on rates ‘would be unwise’
- Yield curve flattens for sixth day on higher March hike odds
Did Chair Yellen Increase Chance of a March Rate Hike?
Treasuries slumped after Federal Reserve Chair Janet Yellen said waiting too long to raise interest rates “would be unwise” and that increases “would likely be appropriate” at upcoming meetings should employment and inflation continue to move toward the central bank’s goals.
Yields across the curve were higher by 3-5 basis points, with the 10-year settling around 2.47 percent at 3 p.m. in New York, its highest level since Feb. 3, after briefly rising above 2.50 percent. Treasuries have dropped for four straight sessions in part on resurgent expectations that President Trump’s administration will introduce pro-growth, inflationary policies. Traders are pricing in 34 percent odds that the Fed raises rates at its March meeting, based on the assumption that the effective fed funds rate will trade at the middle of the new FOMC target range after the next increase, compared to 30 percent before Yellen’s testimony began.