Treasury yields edge higher after release of Fed minutes

When they met last month there were considerable divisions among policy-makers at the US Federal Reserve as regards the timing of the first increase in interest rates, records of the meeting showed on Wednesday.

The minutes of the Federal Open Market Committee’s (FOMC) deliberations on 17 and 18 of March showed that several rate-setters preferred a June lift-off for the Fed funds rate – the US central bank’s main policy tool – whereas others argued for delaying an increase further, while two members of the FOMC wanted to wait until 2016.

Nonetheless, markets initially seemed to focus on the fact that “several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting.”

The latest set of projections for the Fed funds rate at year-end 2015, released alongside the central bank's last policy statement, showed that the median forecast had dropped to 0.625%, which had appeared to effectively rule out an increase in rates in June.

On Tuesday evening July Fed funds futures were assigning only a 10% probability to a June Fed hike.

As of 19:13 the yield on the benchmark 10-year US Treasury bond was rising by four basis points to stand at 1.91%, as opposed to 1.90% just before the release of the minutes.