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10-year Treasury yield stays near 7-month lows even after the Fed raises rates

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    US 10-YR
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    Treasury yields held lower after the Federal Reserve raised rates Wednesday. Yields fell earlier after disappointing economic reports.

    The yield on the benchmark 10-year Treasury notes, which moves inversely to price, traded near 2.13 percent. Ahead of the Fed, the 10-year yield fell to 2.103 percent, its lowest since Nov. 10.

    The 2-year Treasury yield traded near 1.33 percent, just above its low of the day. The 30-year bond yield traded near 2.78 percent.

    The Fed raised its benchmark interest rate by a quarter point Wednesday, as expected, and maintained its rate forecasts for 2017 and 2018. The Fed also said it expects to begin reducing its balance sheet this year, "provided that the economy evolves broadly as anticipated."

    The central bank added it expects inflation to remain below its 2 percent target this year. A recent slowdown in inflation has become a red flag for markets, which doubt the Fed's ability to hike a second time before year end.

    "It's important not to overreact to a few readings on inflation," Fed Chair Janet Yellen said during a post-meeting press conference, noting the reports can be "noisy."

    "This morning's reading in CPI showed weakness in a number of categories and is certainly something we will be monitoring in the months ahead," she said.

    U.S. 10-year Treasury yield 1-day performance

    The consumer price index for May showed a 0.1 percent decline, versus expectations for a slight increase. Retail sales fell 0.3 percent last month, the most since January 2016.

    Treasury yields fell after the reports and held near those lows after the Fed statement.

    "The big move [in yields] during the day was immediately after the twin reports," said Larry Hatheway, group chief economist at GAM Holding.

    In oil markets, prices fell after data the Energy Information Administration showed a smaller-than-expected decrease in oil inventories. U.S. crude oil futures settled at a 7-month low of $44.73.