10-Year Treasury Yield Declines as Fed Hikes Rates

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The yield on the benchmark 10-year Treasury note declined on Wednesday after the Federal Reserve raised its benchmark interest rate by a quarter percentage point, as expected.

The10-year yield was down by 12 basis points to 3.409%. The 2-year Treasury yield fell 11 basis points to 4.096%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

The Fed's first meeting of the year concluded on Wednesday. Aligning with market expectations, the rate-setting Federal Open Market Committee boosted the federal funds rate by 0.25 percentage point, taking it to a target range of 4.5%-4.75%, the highest since October 2007.

The Fed also pledged future rate increases, reinforcing beliefs that it might still tip the economy into a recession. However, the central bank also gave hints that it could back off its tightening plans at some point, saying inflation has eased somewhat.

"We can now say for the first time that the disinflationary process has started," Fed Chair Jerome Powell said in a press conference Wednesday afternoon.

Wednesday's move by the Fed is a further slowdown of the pace of rate hikes after the Fed implemented four consecutive 75 basis point increases, followed by a 50 basis point hike, at its last five meetings.

"The 'risk rally' that has been in place since last fall has been largely predicated on the belief that members of the Fed will pivot on their interest rate intentions by mid-year," said Mike Mullaney, director of global markets research at Boston Partners. "Today's statement accompanying the 25-basis increase gave no indications of that happening."

Elsewhere, manufacturing activity declined more than expected in January, according to the latest ISM survey. The manufacturing PMI for the month came in at 47.4%, representing the share of companies reporting expansion. That was below the 48.4% reading for December and less than the 48% Dow Jones estimate.

Meanwhile, job openings surged in December, according to the Bureau of Labor Statistics on Wednesday. There were just over 11 million openings for the month, up from 10.44 million in November and more than the 10.3 million FactSet estimate.

— CNBC's Jeff Cox contributed to this report.

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