Bonds: US 10-year yields jump to May 2014 highs

These were the movements in some of the most widely-followed longer-term government bond yields:

US: 2.54% (+7bp)
UK: 1.39% (-6bp)
Germany: 0.30% (-6bp)
France: 0.74% (-6bp)
Italy: 1.80% (-8bp)
Spain: 1.40% (-3bp)
Portugal: 3.78% (+2bp)
Greece: 7.10% (+4bp)
Japan: 0.06% (-3bp)

Longer-term US Treasuries came under heavy selling pressure after the US central bank flagged the potential for up to three more interest rate hikes in 2017, which was nonetheless roughly in-line with market pricing about a half hour ahead of the end of the session .

Two-year US Treasury notes, in particular, were heavily sold, pushing the yield up by 10 basis points to 1.26%, while that on the 10-year note was at its highest since May 2014.

They key bit of information was the rise in Fed rate-setters´ short to medium-term projections for interest rates contained in the so-called (and sometimes controversial) 'dot-plot' graphs which the Fed publishes before each of the chairman´s press conferences.

In September, those graphs had shown the median expectation among monetary policy-makers in Washington DC was for two more rate hikes and now it had risen to three.

However, another set of projections from the members of the Fed´s board and regional Fed presidents showed that the central tendency for the Fed funds rate, which eliminates the three highest and lowest submissions, had in fact fallen from 1.45% to 1.35% in 2017.

That was nearly in-line with the pricing on Fed funds futures, which as of 2030 GMT were assigning roughly 47% odds that the target range for the Fed funds rate would rise by 75 basis points in 2017.

The remainder of the major sovereign bond markets had closed the session sharply higher, with yields lower across the board as a result, ahead of Thursday´s FOMC meeting.