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TREASURIES-Yields jump as Fed keeps December rate hike alive
September 20, 2017 / 6:49 PM / a month ago

TREASURIES-Yields jump as Fed keeps December rate hike alive

 (Recasts with Fed statement, new throughout)
    * Fed signals another rate hike likely this year
    * Ten-year Treasury yields highest since Aug. 8

    By Karen Brettell
    NEW YORK, Sept 20 (Reuters) - Benchmark U.S. Treasury yields
jumped to their highest levels in six weeks on Wednesday after
the Federal Reserve’s statement from its September meeting was
interpreted as keeping a December interest rate hike on the
table.
    New economic projections released after the Fed's two-day
policy meeting showed 11 of 16 officials see the "appropriate"
level for the federal funds rate, the central bank's benchmark
interest rate, to be in a range between 1.25 percent and 1.50
percent by the end of 2017, one-quarter of a point above the
current level.             
    The Fed’s economic projections for 2017 were unchanged, said
Charlie Ripley, investment strategist at Allianz Investment
Management in Minneapolis.
    “That gives us a little bit more confidence that there is
probably going to be a third rate hike coming in December,”
Ripley said.
    Benchmark 10-year notes             fell 11/32 in price to
yield 2.29 percent, up from 2.24 percent before the Fed’s
statement and the highest level since Aug. 8.
    Interest rate futures traders are now pricing in a 72
percent chance of a December rate hike, up from 68 percent
before the statement, according to the CME Group’s FedWatch
Tool.
    The Fed also said it would begin in October to reduce its
approximately $4.2 trillion in holdings of U.S. Treasury bonds
and mortgage-backed securities, as expected, by initially
cutting up to $10 billion each month from the amount of maturing
securities it reinvests.
    

    
 (Additional reporting by Saqib Ahmed; Editing by Cynthia
Osterman)
  
 
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