TREASURIES-Yields rise as Fed eyes earlier start to rate hikes
(Recasts with Fed meeting statement; updates yields) By Karen Pierog CHICAGO, June 16 (Reuters) - U.S. Treasury yields shot up on Wednesday after Federal Reserve policymakers moved up their projections for commencing interest rates hikes to 2023 from 2024 as the economy recovers from the coronavirus pandemic. At the conclusion of its two-day policy meeting, the Fed disclosed that 11 out of 18 officials were projecting at least two quarter-point interest rate increases in 2023 even as the central bank pledged to keep a supportive policy in place to aid the ongoing jobs recovery. The benchmark 10-year yield was last up 5.6 basis points at 1.555%, its highest level in a week. With inflation rising faster than expected and the economy bouncing back quickly, the market had been looking for clues of when the Fed may alter the policies put into place last year to combat the economic fallout from the pandemic, including a massive bond-buying program. The Fed raised the interest it pays on excess reserves (IOER) to 0.15% from 0.1% and the rate on overnight reverse repurchase agreements to 0.05% from 0%. The two-year Treasury yield was last 3 basis points higher at 0.1971%. A closely watched part of the yield curve that measures the gap between yields on two- and 10-year Treasury notes was last about 3 basis points steeper at 135.31 basis points. The yield curve between five-year notes and 30-year bonds flattened by about 8.52 basis points to 132.01 basis points. June 16 Wednesday 2:35PM New York / 1835 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0425 0.0431 0.018 Six-month bills 0.0575 0.0583 0.017 Two-year note 99-220/256 0.1971 0.030 Three-year note 99-144/256 0.3971 0.055 Five-year note 99-106/256 0.8711 0.086 Seven-year note 99-222/256 1.27 0.076 10-year note 100-164/256 1.555 0.056 20-year bond 101-244/256 2.1291 0.012 30-year bond 103-232/256 2.1961 -0.003 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.50 -0.25 spread U.S. 3-year dollar swap 9.25 -0.50 spread U.S. 5-year dollar swap 6.75 -0.25 spread U.S. 10-year dollar swap -3.00 0.00 spread U.S. 30-year dollar swap -30.75 1.25 spread (Reporting by Karen Pierog; Editing by Leslie Adler)
