By Kevin Buckland
TOKYO (Reuters) -The yield on two-year U.S. Treasury notes rose to a 17-year high of 5.1970% on Thursday, a day after the Federal Reserve held interest rates steady but stiffened its hawkish stance for future policy.
The 10-year yield rose to 4.4310%, a new 16-year peak.
The U.S. central bank projected a further rate increase by the end of the year and expected monetary policy to be significantly tighter through 2024 than previously thought.
Fed Chair Jerome Powell’s “cautious view that a ‘soft landing’ is not even the base case may reflect the uncertainties of policy lag, especially alongside the possible need for more tightening,” Mizuho analysts wrote in a client note.
“Against this backdrop the case for higher front-end yields, with distinct upside bias to yield volatility may persist into Q3 and early Q4,” ahead of the next policy meeting in November, they wrote.
Ad: Save every day with Amazon Deals: Check out today's daily deals on Amazon.
Money market traders now see better than 50% odds of a quarter-point hike by year-end, from around 40% probability before the Fed decision.
(Reporting by Kevin Buckland; Editing by Christian Schmollinger)