U.S. government debt yields dropped on Wednesday after the Federal Reserve said it will be "patient" when making decisions about future monetary policy. The Fed also removed reference to "further gradual increases" to the federal funds rate in its statement, a signal some market participants took to mean that it may slow the pace of interest rate increases in 2019.
In a separate release, FOMC members also mentioned the reduction to the central bank's balance sheet. The committee issued a separate three-paragraph statement noting that "it is appropriate at this time to provide additional information regarding its plans to implement monetary policy over the long run."
At 2:34 p.m. ET, the yield on the benchmark 2-year Treasury note was up at 2.538 percent while the 10-year Treasury note yield was higher at around 2.706 percent. The yield on the 30-year Treasury bond was mostly unchanged at 3.054 percent. Yields fall as bond prices rise.
The Fed's balance sheet is a mix of Treasurys and mortgage-backed securities which it bought in an effort to lower long-run rates during and after the financial crisis. At its peak, the balance sheet ran to $4.5 trillion after being less than a $1 trillion before the stimulus program began.