Treasury yields jump, dollar strengthens on Fed decision

By Nick Brown

NEW YORK, June 13 (Reuters) – U.S. Treasury yields jumped and the dollar pared earlier losses on Wednesday after the Federal Reserve raised interest rates and signalled that two more hikes could be coming this year.

Ten-year notes yielded a one-week high, while two-year note yields rose to a three-week peak after the Fed’s decision to raise its benchmark overnight lending rate a quarter of a percentage point, to a range between 1.75 percent and 2 percent.

Policymakers also projected a slightly faster pace of rate increases in the coming months, with two additional hikes expected by the end of this year, compared to one previously.

“The labour market has continued to strengthen … economic activity has been rising at a solid rate,” the Fed’s rate-setting committee said in unanimous statement after the end of a two-day meeting.

Benchmark 10-year U.S. Treasury notes last fell 9/32 in price to yield 2.9903 percent, from 2.957 percent late on Tuesday.

The 30-year bond last fell 11/32 in price to yield 3.1096 percent, from 3.092 percent Tuesday.

The dollar index, which measures the greenback against a basket of currencies, rose 0.09 percent, with the euro up 0.06 percent to $1.175.

“There was some question about the December rate hike and it looks like the Fed is sticking to that plan and I would say this is a very mild negative for risk markets,” said Matthew Forester, chief investment officer at Lockwood Advisors Inc in King of Prussia, Pennsylvania.

“Each rate hike becomes more difficult for the risk markets and the real economy to digest.”

Investors also awaited policy meetings later this week at the European Central Bank and

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