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Treasurys surge after the Fed hikes

Mar 15, 2017, 23:53 IST

US Treasury bonds are soaring after the Federal Reserve hiked its key interest rate to a range of 0.75% to 1% at Wednesday's meeting. The rate hike is the third by the Fed since December 2015 and has the central bank on a path to meet its target of three rate hikes by the end of the year.

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"Hikes are generally bad for stocks, somewhat bad for the US dollar, and bullish for 10-year yields and commodities," Tom Leveroni and Shourui Tian of Nautilus Research wrote in a note to clients sent out on Wednesday.

Aggressive buying across the complex is having the biggest impact on the belly of the curve, with yields there down as much as 8 basis points. Here's a look at the scoreboard as of 2:15 p.m. ET:

  • 2-year -5.3 bps @ 1.324%
  • 3-year -6.7 bps @ 1.617%
  • 5-year -8.0 bps @ 2.048%
  • 7-year -7.9 bps @ 2.340%
  • 10-year -6.6 bps @ 2.535%
  • 30-year -4.8 bps @ 3.127%

Wednesday's buying has pushed yields off their recent highs. The 10-year yield put in a high of almost 2.63% on Tuesday, falling just 1bp below its December 15 peak.

Interestingly, the rate hike is causing the yield curve to steepen with the 5-30-year spread wider by more than 4 bps at 109 bps.

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