Treasuries declined after Federal Reserve Chair Janet Yellen suggested that the central bank may increase interest rates sooner than anticipated next year.
Longer-term U.S. government securities led losses as policy makers said they will be patient on the timing of the first interest-rate increase since 2006, replacing a pledge to keep borrowing costs near zero for a “considerable time,” and raised their assessment of the labor market. Yellen said at a news conference a rate increase won’t take place for “at least the next couple of meetings.” Shorter-maturity debt briefly pared losses after the central bank reduced projections for the federal funds rate.
“They went out of their way to throw in patience, and then say they could move the next couple of meetings,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc. “The market has a different interpretation on what she said, outside of the statement.”
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