Investors React Coolly To Signals by FOMC; Treasurys Decline Slightly As Fed Indicates Increases In Rates Could End Soon
NEW YORK -- The release of a Federal Reserve document that suggested to some bond investors that rate increases are nearing their end failed to have much impact on U.S. Treasury prices yesterday and left the market in the same modestly negative spot it was in ahead of the release.</br></br>According to the minutes from the Jan. 31 Federal Open Market Committee meeting, Fed officials, while worried about upside risks to inflation, said that "the stance of policy seemed close to where it needed to be given the current outlook." But they added, in a familiar refrain, that "some further policy firming might be needed to keep inflation pressures contained and the risks to price stability and sustainable."</br></br>The FOMC minutes for most in the market confirmed what they already knew: the Fed has a modest amount of rate increases left in it, and how that tightening plays out will be the product of what the economic data do. As such, the lack of surprise stripped from the market any catalyst to trade dramatically. In turn, that left the market very close to the same negative tone that dominated the day.</br></br>"While the minutes were hawkish, they did not trigger the sell-off that some were expecting," said Ian Lyngen, strategist with RBS Greenwich, in Greenwich, Conn. "The trend to lower prices has emerged and we expect it will extend into the close."</br></br>By day's end, the 10-year Treasury note stood at 99 15/32, down 7/32 or $2.19 per $1,000 invested, to push up the yield to 4.567%.