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US Treasury yields spike after Fed minutes

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U.S. Treasurys yields rose on Wednesday after the Federal Reserve released minutes of its July meeting, which offered few new clues on when the central bank is likely to pare back its bond purchase program but maintained expectations it is likely to occur soon.

A few Federal Reserve officials last month thought it would soon be time to slow the pace of the bond buying "somewhat," but others counseled patience, according to the meeting minutes.

Worries the Fed could soon slow its massive bond-buying program have sent 10-year yields soaring by more than full percentage point since the beginning of May, with yields holding just under two-year highs on Wednesday.

"I think this sets them up for tapering to begin sooner rather than later," said Sam Diedrich, a portfolio manager at for Pacific Alternative Asset Management Company (PAAMCO) in Irving, California. "Growth has been moderate and modest, not exceeding expectations but still showing a lot of resilience to some of the government fiscal headwinds that were felt in the first half of the year."

Benchmark 10-year notes dropped 17/32 in price to yield 2.88 percent, up from 2.82 percent late on Tuesday. They rose to two-year highs of 2.90 percent on Monday.

Thirty-year bonds extended losses to 29/32 in price to yield 3.91 percent, up from 3.82 percent late on Tuesday. They got as high as 3.914 percent on Monday.

A Reuters poll showed last Wednesday that a majority of economists expect the Fed to reduce bond purchases at its Sept. 17-18 policy meeting, with a consensus expecting the U.S. central bank would reduce purchases by $15 billion initially.

Reuters.

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