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TREASURIES-Yields jump as hawkish Fed hikes rates by 75 bps

·2 min read

(Recasts with Fed statement, updates prices) By Karen Brettell NEW YORK, Sept 21 (Reuters) - Benchmark 10-year U.S. Treasury yields briefly rose to 11-year highs on Wednesday, and two-year yields were the highest since 2007 as the yield curve continued to invert after the Federal Reserve hiked rates by 75 basis points and signaled more increases are to come. The U.S. central bank’s target interest rate was increased to a range of 3.00%-3.25% and new projections showing its policy rate rising to 4.40% by the end of this year before topping out at 4.60% in 2023. It comes as the Fed battles persistent inflation that is running near 40-year highs. The Fed’s economic projections, meanwhile, showed the economy slowing to a crawl in 2022, with year-end growth at 0.2%, rising to 1.2% in 2023, well below the economy's potential. The unemployment rate is projected to rise to 3.8% this year and 4.4% in 2023. Inflation is seen slowly returning to the Fed's 2% target in 2025. Two-year Treasury yields reached 4.123%, the highest since October 2007 and five-year yields hit 3.861%, the highest since November 2007, Benchmark 10-year notes rose to 3.64%, the highest since February 2011, before tracing the increase to be little changed. The yield curve between two-year and 10-year notes inverted further to minus 51 basis points, indicating concerns about a recession in the next one-to-two years. September 21 Wednesday 2:23PM New York / 1823 GMT Price Current Net Yield % Change (bps) Three-month bills 3.24 3.3121 -0.036 Six-month bills 3.815 3.9441 0.042 Two-year note 98-118/256 4.0826 0.119 Three-year note 98-128/256 4.039 0.102 Five-year note 96-248/256 3.8036 0.051 Seven-year note 96-102/256 3.7184 0.022 10-year note 93-60/256 3.5672 -0.006 20-year bond 94-84/256 3.7831 -0.062 30-year bond 90-56/256 3.5323 -0.049 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 38.50 0.50 spread U.S. 3-year dollar swap 18.75 0.75 spread U.S. 5-year dollar swap 9.00 0.25 spread U.S. 10-year dollar swap 5.75 -0.75 spread U.S. 30-year dollar swap -32.25 -1.50 spread (Reporting by Karen Brettell; editing by Jonathan Oatis and Diane Craft)