Treasurys slide after the Fed says growth slowdown is 'transitory'

Treasurys are under pressure after the Federal Reserve held its key rate in a range between 0.75% and 1.00%. Selling is having the biggest impact on the front and belly of the curve, with yields there up as much as 5 basis points. Interestingly, buying is taking place at the long end of the curve, pushing the 30-year down by nealry two basis points. Here’s a look at the scoreboard as of 2:33 p.m. ET:

  • 2-year +4.0 bps @ 1.298%
  • 3-year +4.1 bps @ 1.484%
  • 5-year +5.1 bps @ 1.854%
  • 7-year +4.4 bps @ 2.133%
  • 10-year +3.6 bps @ 2.316%
  • 30-year -1bp @ 2.959%

In it’s April statement, the Federal Open Market Committee noted that “the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labour market conditions will strengthen somewhat further, and inflation will stabilise around 2 per cent over the medium term.”

Bloomberg’s World Interest Rate Probability data suggests a 93.8% chance the Fed will raise rates in June. That’s up from 69.7% on Wednesday morning.

Wednesday’s post-Fed trade has caused the yield curve to flatten, pushing the 2-10-year spread down to 101.6 bps. The spread is contending with its flattest close since President Donald Trump’s election night win.

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