Prices for U.S. Treasuries fell on Wednesday, with investors weighing the extent of a rally sparked this week by a proposed Cypriot bank tax and the Federal Reserve holding firm on its aggressive stimulus plan.
The Fed will keep buying $85 billion in mortgage and Treasury bonds until the employment outlook picks up markedly, the U.S. central bank said in a statement. But the bank nonetheless removed a key section of its policy statement indicating financial conditions had eased, just days after the European bailout plans for Cyprus roiled global markets.
"Any concerns that the Fed was going to get more hawkish don't appear to have panned out," said John Canavan, fixed-income analyst at Stone & McCarthy Research Associates in Princeton, New Jersey.
"They offered improved projections for the economy and the unemployment rate over the next couple of years, but that's not a surprise." Prices pared losses slightly on the news but remained lower on the day.