The yield curve is flattening

Treasurys are under pressure after the Federal Open Market Committee announced a 25 basis point hike to a rang of 0.50% to 0.75% at the conclusion of its tqwo-day meeting. The rate hike was the first by the Fed since it lifted its fed funds rate off the zero bound in December 2015.

Wedneday’s announcement while expected, was notable in the sense that the Fed’s “dot plot” showed members anticipate three rate hikes in 2017 versus their previous estimate of two. Hence, selling is having the biggest impact on the front end of the yield curve with yields there up almost 7 basis points.

Here’s a look at the scoreboard as of 2:18 p.m. ET:

  • 2-year +5.7 bps at 1.221%
  • 3-year +6.4 bps @ 1.527%
  • 5-year +6.7 bps @ 1.976%
  • 7-year +5.2 bps @ 2.306%
  • 10-year +3.7 bps @ 2.508%
  • 30-year -0.2 bps @ 3.129%

Selling up front has the 2-year yield at its highest level since the end of September. Meanwhile, at the long end, the 30-year is contending probing its July 2015 highs.

The post-Fed selling has flattened the yield curve with the 5-30-year spread tigther by 6 bps at 11.5.5 bps, where it is contending with its flattest level since September.

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