U.S. government debt yields rose on Wednesday after the Federal Reserve hiked rates as expected in its March meeting and upgraded the economic outlook.
At the latest reading at 3:51 p.m. ET, the yield on the benchmark 10-year Treasury note had risen to 2.883 percent, off highs above 2.93 percent reached earlier in the afternoon following the Fed decision.
The yield on the 30-year Treasury bond ticked upward to 3.114 percent. Bond yields move inversely to prices.
The Federal Reserve's monetary policymaking arm wrapped up the final day of its two-day meeting Wednesday by hiking the target federal funds rate by a quarter percentage point to 1.5 percent to 1.75 percent points.
The Fed also upgraded its economic forecast, suggesting that the path of rate hikes could be more aggressive. Wall Street currently expects three hikes in 2018, and that remained the baseline forecast, but at least one more increase was added in the following two years.
It was the first meeting led by newly-appointed Chair Jerome Powell.
"The economic outlook has strengthened in recent months," the FOMC's statement said. "Job gains have been strong in recent months, and the unemployment rate has stayed low."
Investors scrutinized the Fed's projections for future inflation and economic outlook as captured in the so-called dot plot, a chart that includes anonymous entries from each official on the course of interest rates.
"If you look how the dots came out, a lot of people were looking for a shift upward in the 2018 dots," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "They upgraded the outlook of the labor market and we know that inflation expectations have moved higher ... but I think it's just really Powell just buying some time here."
The closely-watched yield curve steepened Wednesday after the yield on the two-year Treasury note fell from 2008 highs above 2.36 percent to 2.308 percent as investors grew more confident that the Fed would not hike rates four times in 2018.
The yield spread between the two-year note and the 10-year note rose to nearly 58 basis points, up from 54 basis points Tuesday.
Powell, who has previously served in the Federal Reserve and comes from a career in banking, is expected to deviate from the highly-scripted commentary offered by his predecessors, Janet Yellen and Ben Bernanke.
The chair's comments reflected "continued optimistic outlook on the economy and confidence that the 2 percent inflation target will be hit, and they're willing to adept if needed," said Craig Bishop, vice president of U.S. fixed income at RBC Wealth Management.
"Coming in, it was the outcome that was to be expected," Bishop added. "They're setting themselves up for that more aggressive stance."