The yield on the benchmark 10-year Treasury note sank 8 basis points to 2.519 percent, while the yield on the 5-year Treasury bond dove 10 basis points to 2.328 percent, its lowest level since February 2018. The short-term 3-month Treasury bill traded with a yield of 2.473 percent and the 2-year note rate dropped 7 basis points to 2.4 percent. Yields rise as bond prices fall.
The difference between the yield on the 10-year Treasury note and the yield on the 3-month Treasury bill was 5.5 basis points, the first time the yield curve flattened below 10 basis points since September 2007.
The Fed on Wednesday downgraded its economic forecast and said it plans to end its program of reducing the bonds it holds on its balance sheet in six months, a process closely followed by fixed-income traders around the globe.
"I guess we learned the definition of the word 'patience' and it means no rate hikes in 2019," said Jim Caron, Managing Director of Global Fixed Income at Morgan Stanley Investment Management. "I would argue that the only reason they put one hike in 2020 is that they didn't want to communicate a more dovish message to the market, like an end of the economic cycle."