Treasury yields rise on Fed's more hawkish inflation and interest rate stance

Two rate hikes now expected in 2023

Anna Fedorova
clock • 3 min read

The minutes from the Federal Reserve’s FOMC meeting yesterday (16 June) have revealed a more hawkish stance on inflation and rate hike forecasts, sending 10-year treasury yields higher on the news.

The statement was adjusted to reflect the rising inflation in the US so far in 2021, which hit 5% in May year-on-year, with the headline inflation estimate for the year revised to 3.4%, up a full percentage point from the March estimate. The biggest change, however, was in the dot plot, which now shows two rate hikes in 2023, up from none predicted back in March. This was a hawkish surprise for the market, but the unchanged stance on asset purchases kept bond traders in check. Ten-year treasury yields rose 18bps to 1.586% between yesterday afternoon and the time of writing (7.15am BST...

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