NEW YORK: Longer-dated US Treasury debt prices jumped on Wednesday, snapping a seven-day streak of increases, as the Federal Reserve left the door open for an interest rate increase in June, making shorter-dated government debt less appealing.
A wave of buying in 10- and 30-year Treasuries emerged as traders piled into curve-flattening trades that favor these longer debt maturities over short-dated ones, investors said.
"The curve is flattening here, which is what has happened in the past when the Fed was on a tightening path," said Don Ellenberger, head of multi-sector strategies at Federated Investors in Pittsburgh.
The Fed's policy-setting Federal Open Market Committee, as expected, left its target range on rates unchanged at 0.25-0.50 percent and removed a specific reference on the global economic risks in its policy statement.
"The committee continues to closely monitor inflation indicators and global economic and financial developments," the Fed's policy-setting panel said in a statement following its two-day meeting.
The yield difference between shorter and longer-dated Treasuries shrank, with the gap between two-year and 10-year yields contracting to 102 basis points, its tightest in 1-1/2 weeks, according to Reuters data.
Benchmark 10-year Treasury notes were up 20/32 in price, yielding 1.856 percent, down 7.5 basis points from late on Tuesday. The 10-year yield on Tuesday touched 1.941 percent, its highest level since March 23, according to Reuters.
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