Treasuries moved sharply lower during trading on Wednesday, accelerating to the downside following the Federal Reserve's monetary policy announcement.
After moving modestly lower over the course of morning trading, bond prices pulled back sharply going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.9 basis points to 2.311 percent.
With the sharp increase on the day, the ten-year yield added to the gains posted in the two previous sessions, reaching its highest closing level in over a year.
The pullback seen late in the trading day came on the heels of the release of the Federal Reserve's post-meeting statement.
As was widely expected, the Fed left interest rates unchanged and maintained the pace of its asset purchase program at $85 billion a month.
However, the statement from central bank said that downside risks to the outlook for the economy and the labor market have diminished since the fall. The Fed also acknowledged further improvement in labor market conditions.
"It is these two comments in the statement that caused the spike in interest rates and subsequent drop in equities," said Peter Boockvar of Morgan Stanley.
He added, "Bottom line, the Fed acknowledged a slightly better economic outlook and the market can only take that as a verbal 1st step to some change in policy at their next meeting in July."
In his press conference, Fed Chairman Ben Bernanke said the central bank might be able to scale back its asset purchases later this year if economic conditions warrant.
Trading on Thursday may continue to be impacted by reaction to the Fed statement and the outlook for the central bank's stimulus program.
A slew of economic data is also scheduled to be released on the day, including reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing activity.
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