U.S. Treasurys prices slid on Wednesday as the Federal Reserve chairman suggested the U.S. central bank was prepared to reduce its bond purchases if its economic outlook proves correct, even though the U.S. economy remained stuck at a sluggish pace.
Bernanke's remarks at a news conference after a central bank policy-maker meeting confirmed traders' deepest worries that the dawn of near-interest-free money from the Fed might be approaching an end sooner than they had thought.
(Read More: Fed Keeps the Easing Going)
Fears about less Fed stimulus following by eventual hikes in short-term interest rates caused a flood of selling in Treasurys, with benchmark yields hitting 15-month highs and five-year yields rising to their highest levels since August 2011.
"He was definitely more hawkish than I or most people expected. What surprised me most was the Fed really downplayed the recent decline in inflation. I thought that would give them more pause than it did," said Thomas Graff, fixed income portfolio manager at Brown Advisory in Baltimore.
