Treasury yields rise

US Treasury yields rose on Thursday from more than one-week lows on the view that they had fallen too sharply in the prior session after the Federal Reserve maintained its outlook for only a gradual pace of interest rate increases this year.
The Fed, which as expected raised rates for the second time in three months on Wednesday, said in its policy statement that further rate increases would be "gradual." Officials stuck to their outlook for two more rate hikes this year and three more in 2018. Wall Street's top banks also see just two additional rate rises this year from the US central bank, and most expect at least three more in 2018, a Reuters poll showed on Wednesday.
While disappointment with the Fed's outlook pushed yields lower in a knee-jerk reaction on Wednesday, that sentiment dissipated on Thursday. "(Treasuries) probably got a little overbought yesterday," said David Coard, head of fixed income sales and trading at Williams Capital Group in New York. "Maybe some people decided to take a little profit on that move," he said in reference to the drop in prices and rise in yields Thursday.
Benchmark 10-year Treasury notes were last down 5/32 in price, with yields rising to 2.524 percent from 2.504 percent late on Wednesday. They hit a session high of 2.538 percent. The move higher in benchmark yields came after they extended Wednesday's decline in overnight trading on Thursday to hit a 10-day low of 2.486 percent.
US 30-year bonds fell 19/32 in price, and yields rose to 3.134 percent from 3.102 percent. Yields hit a session high of 3.156 percent in afternoon US Trading. Two-year notes, which are considered most vulnerable to Fed policy, were down slightly in price, while yields increased to 1.324 percent from 1.316 percent.
Two-year yields, which fell more than six basis points on Wednesday to mark their biggest single-day drop since June, extended their decline in overnight trading to a 10-day low of 1.299 percent before moving higher. Yields also increased after Dutch center-right Prime Minister Mark Rutte fought off a challenge by anti-immigration, anti-European Union rival Geert Wilders to score an election win seen as a victory against populist nationalism.
"The fact that Geert Wilders didn't win the Dutch election did remove some risk from the markets," said interest rate strategist Gennadiy Goldberg of TD Securities in New York.