2-year Treasury yield rises after Fed raises rates by half a point, indicates more hikes

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December 14, 2022
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The yield on the

While the hike marked a step down from the central bank’s previous four increases, the Fed indicated that it will keep rates higher through next year, and hold off on cuts until 2024. The central bank also said it expects to raise its “terminal rate” to 5.1% before the hiking cycle concludes.

Bond yields fluctuated throughout Fed Chair Jerome Powell’s press conference, as he indicated more rate hikes are likely to come before the central bank shifts gears on inflation.

“The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path,” Powell wrote.

Wednesday’s moves come after November consumer price index data released indicated that inflationary pressures are easing. Prices rose by 0.1% in November from October and by 7.1% on a yearly basis. Both figures came in lower than economists surveyed by Dow Jones had expected.