NEW YORK: Treasury yields edged lower on Wednesday after the Federal Reserve hiked interest rates by 75 basis points as it tightens monetary policy further in an effort to curb inflation while trying to steer the U.S. economy away from a hard landing.

The increase was widely expected and raised the federal funds rate to a range between 2.25% and 2.5%.

The bond market has been pricing in an economic slowdown, if not a recession, as seen in the inversion of two- and 10-year Treasury note yields. The short end of the yield curve has been higher than the long end nearly all month, with the gap widening to -29.4 basis points on Wednesday.

The gap was little changed after the Fed's decision.

The two-year yield rose 1.8 basis points to 3.061% as the 10-year fell 1.8 basis points to 2.769%. Yields on shorter-term notes normally are lower than long-term notes.

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Another part of the yield curve closely watched for a potential recession if it inverts, the gap between three-month bills and 10-year notes, fell to 29.1 basis points, down from a spread of 118.51 on July 1.

The yield on the 30-year Treasury bond was down 0.4 basis point to 3.004%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.608%.

The 10-year TIPS breakeven rate was last at 2.383%, indicating the market sees inflation averaging about 2.4% a year for the next decade.

The U.S. dollar 5 years forward inflation-linked swap, seen by some as a better gauge of inflationexpectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.429%.