SYDNEY: Treasury yields edged higher along the curve on Thursday, as traders narrowed the odds on an early hike in US interest rates and a faster pace of Federal Reserve stimulus withdrawal.
Benchmark 10-year yields rose 1.4 basis points (bps) to 1.7140%, the highest level since April 2021. Two-year yields, which track short-term rate expectations, inched up to a new 22 month top of 0.8380%.
Minutes of the Federal Reserve's last meeting hinted they might hike rates as early as March, when analysts had thought May or June were more likely start dates.
Some participants also thought it could be appropriate to start reeling in the size of the bank's balance sheet in tandem with hikes.
"After pussyfooting around the start of tapering for months, the Fed theme changed rapidly to faster tapering, and earlier and more rate hikes," said Rabobank strategist Philip Marey.
"Now we can add earlier and faster balance sheet reduction."
Fed funds futures imply an almost 80% chance of a rise to 0.25% at the March Fed meeting, and rates around 0.80% by the end of the year.