The ten-year U.S. Treasury yield reached 1.74% on Thursday morning, despite Federal Reserve security that had no plans to raise interest rates soon or reduce the program to buy good.
The yield on the 10-year benchmark treasury note had cut some gains to 1.722% at 5:15 am ET. The yield on the 30-year Treasury bond stood at 2.483%. Yields are reversed to prices.
After concluding the two-day Fed policy meeting on Wednesday, the central bank said it saw stronger-than-expected economic growth, forecasting gross domestic product to rise to 6.5% in 2021. This exceeds the 4.2% increase in GDP forecast in December.
The Fed also forecast core inflation to reach 2.2% this year, but in the long run it is expected to remain around 2%.
The US central bank also indicated that it did not plan to raise interest rates until 2023 and that it would continue its purchase program of at least $ 120 billion a month.
Fed Chairman Jerome Powell reiterated that the central bank wants to see inflation above its 2% target and a substantial improvement in the U.S. labor market before considering changes in rates or monthly purchases of good.
Quilter Investors portfolio manager Hinesh Patel said Wednesday after the Fed’s policy decision that “while there is no answer right now it’s the only thing on offer, whatever Powell does in right now, the Fed is bringing bond markets to the danger zone. “
“If they do nothing, the bond market will continue to increase yields in search of the Fed raising or adjusting bond buying, while if it acts now, it will be accused of overstimulating and being too hot,” he explained.
However, Willem Sels, HSBC’s director of private banking and wealth management investments, said the Fed’s message of progressively normalizing policy meant it was a “very different situation than in 2013. , in which the reduction of bonds surprised the market for the first time, a real return to increase quickly and significantly and lead to the sale of equities, gold and risky assets “.
There are some concerns that the recent rise in bond yields and inflation expectations could mean a repeat of the “tonic rage” of 2013. That’s when Treasury yields rose sharply due to market panic after that the Fed said it planned to begin reducing its quantitative easing program.
On Thursday, weekly unemployment claims data will be due out at 8:30 am ET.
Auctions are set to be held Thursday for $ 40 billion in four-week bills, $ 40 billion in eight weeks and $ 13 billion in 9-month, 10-year Treasury inflation-protected securities.
– CNBC’s Thomas Franck contributed to this report.