The Federal Reserve just released its latest FOMC statement on monetary policy, and bonds are taking a hit.
Before the release at 2 PM ET, the yield on the 10-year U.S. Treasury note was hovering around 2.21%. Following the release, the 10-year yield is up to 2.26%.
In addition to the FOMC statement, the Fed also released updated macroeconomic forecasts.
Given the language in the statement, which paints the economic recovery in a positive light, and the updated forecasts, which now assume lower unemployment and higher GDP growth than before, bonds are selling off.
The Fed has been adamant that it will only begin to taper back the pace of bond purchases it makes under its quantitative easing program of monetary stimulus when the economic data show enough improvement to justify such action.
The fear is that the Fed is starting to recognise improvements in the economy, and may as a result be more inclined to begin the tapering sooner than later.
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