US Treasury yields were slightly lower on Wednesday after the Federal Reserve raised interest rates and forecast two more hikes for 2018, fewer than the three that many market participants had expected. Policymakers were largely split as to whether a total of three or four rate hikes would be needed this year in their rate projections, known as the "dot plot" because the outlooks are plotted on a chart. They predicted rates would rise three times next year and two times in 2020.
There was "no change to 2018 and I think that's why you have such a muted reaction," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
A jump in consumer prices in January increased expectations for four rate hikes in 2018, though February's consumer price index last week showed prices cooled that month.
However, "one more dot shift and we would have gotten the expectation for four rate hikes this year, so they were pretty close to moving in that direction," said Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research in New York.
Two-year note yields, which are highly sensitive to interest rate policy, jumped as high as 2.366 percent, the highest since September 2008, before falling back to 2.308 percent.
Benchmark 10-year note yields increased to 2.936 percent, the highest since March 12, before retracing to 2.894 percent.
Concerns about rising bond supply as the government faces a widening trade deficit and plans higher budget spending has also been weighing on the market this year.
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