Treasuries Move Notably Lower As Traders Digest Fed Announcement

Following the modest pullback seen in the previous session, treasuries showed a notable move to the downside during trading on Thursday.

Bond prices moved steadily lower in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.6 basis points to 1.410 percent.

With the advance on the day, the ten-year yield ended the session at its highest closing level in over two months.

The weakness among treasuries came as traders continued to digest the Federal Reserve’s monetary policy announcement on Wednesday, when the central bank signaled tapering asset purchases could be coming “soon.”

The Fed said that a “moderation in the pace of asset purchases may soon be warranted” if progress towards it goals of maximum employment and price stability continues broadly as expected.

During his post-meeting press conference, Fed Chair Jerome Powell indicated the central bank could begin tapering its asset purchases as soon as its next meeting in early November.

“While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” Powell said.

Powell said substantial further progress has been achieved with regard to the Fed’s inflation goal, while “the test for substantial further progress on employment is all but met.”

The Fed’s latest projections also indicated an interest rate hike could come sooner than previously expected, although officials still seemed divided on the timing.

Meanwhile, traders largely shrugged off a report from the Labor Department showing first-time claims for U.S. unemployment benefits unexpectedly increased for the second straight week in the week ended September 18th.

A report on new home sales in the month of August may attract attention on Friday along with remarks by Powell and several other Fed officials.

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