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Treasury Yields Lowered After Fed Minutes

January 11, 2017
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The Federal Reserve meeting minutes always have a major impact on the treasury yields. On Wednesday, the treasury yields were slightly lower as the Federal Reserve minutes proved to be less hawkish. It is much different from market anticipation.

The 10-year treasury notes finished flat at 2.452% and the 30-year treasury notes were going firmly at 3.045%. The two-year treasury notes, however, enjoyed some increase as it reached basis point of 1.210 from 1.1. The bond yields are generally inverse to the price points.

After the election on November 8th, the treasury yields have improved dramatically. Donald Trump during his presidential rally explained that he is focusing on increasing the fiscal stimulus. The Federal Reserve also announced earlier that it will increase the interest rates thrice in this year.

The Federal Reserve meeting data was revealed on Wednesday. According to Wednesday’s minutes, the Fed thinks that it is too early to increase projections. The officials feel that strengthening of the dollar and sluggish movement of other currencies can put a wedge in the economic growth. Experts have understood that the Fed doesn’t want to be aggressive at the moment. The Federal Reserve has taken a wait and see approach because the market is already extremely volatile.

Post-election, there was a dramatic selloff of Treasury bonds. However, the trend is now much slower as the investors have accepted that various new policies such as tax cuts, fiscal spending, and boosted interest rates will take time to implement.