Treasury Prices Drop as Investors Absorb News Of the Federal Reserve's New Stance on Rates
NEW YORK -- Treasury prices ended lower after Federal Reserve policy makers did what many bond investors had anticipated.</br></br>The Fed left its target for the federal-funds, or overnight bank, lending rate, unchanged at 6.50%.</br></br>But its announcement of the decision suggested that the Fed is leaning toward lowering interest rates in the near future. It said that although there remains some potential for inflation, the risks to the economy now "are weighted mainly toward conditions that may generate economic weakness in the foreseeable future."</br></br>Largely because of optimism about interest rates, Treasurys had managed four consecutive higher closes through Friday, and most issues ended higher again Monday.</br></br>Yesterday, prices trended lower on profit-taking earlier in the day, then recovered some on the news of the Fed decision. But, "the market was basically expecting this, and had something like this priced in," said Drew Matus, an economist at Lehman Brothers in New York.