Treasury sell-off continues after divided Fed holds interest rates steady - CNBC

What the report says

CNBC reported that U.S. Treasury yields were largely steady Thursday after an overnight sell-off, as investors assessed the Federal Reserve’s decision to leave interest rates unchanged. The 30-year Treasury yield remained near levels last seen in 2007 after rising 6 basis points after regular trading Wednesday to move above 5.2%, while other parts of the yield curve showed little change.

According to CNBC, the Federal Open Market Committee voted 9-3 on Wednesday to keep its benchmark rate in a 3.5% to 3.75% range. The article said it was the second FOMC meeting led by Chairman Kevin Warsh. In its policy statement, the Fed said economic activity was growing at a solid pace despite heightened uncertainty, including from the Middle East conflict, and said job gains had kept up with labor-force growth while unemployment was little changed.

CNBC cited Deutsche Bank analysts who said the Treasury sell-off continued overnight and that the bank’s economists still expect the Fed to raise rates by 50 basis points this year. The analysts said the market reaction, including higher long-term rates and lower forward real yields, could indicate doubts about a near-term return to price stability. They also said U.S. credit conditions remained generally supportive, though a steeper yield curve could weigh on an already weak housing market.

The report also noted fresh economic data showing U.S. growth slowed to 1.5% in the second quarter, below a Dow Jones estimate of 1.8%. Core PCE inflation rose 0.1% for the month and 3.3% from a year earlier, compared with expectations of 0.2% and 3.3%, respectively.