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Bonds Extend Drop After Fed Sparks One of Worst Days in Decade

  • Widely watched part of yield curve narrows to least since 2007
  • Potential half-point hikes cast fresh uncertainty in market
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WATCH: Federal Reserve Chair Jerome Powell says the central bank will take the “necessary steps” to ensure a return to price stability. He speaks at the National Association for Business Economics.Source: Bloomberg
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The U.S. bond market reeled further on Tuesday, extending Monday’s declines after Federal Reserve Chair Jerome Powell’s aggressive rate hike comments drove yields on short-dated Treasuries to one of their biggest daily jumps of the past decade.

The central bank chief’s hawkish tone led traders to rapidly ratchet up estimates for how aggressively the Fed will tighten monetary policy this year as rising commodity prices threaten to add fuel to the fastest consumer-price increases in four decades.