Treasury yield curve flattens after Fed

The yields at the short-end of the treasury market curve spiked on hawkish Fed dot plot chart, thus leading to a flatter yield curve.

The 2-year yield was last seen trading 7 basis points higher around 1.24%. The 5-year yield was up 7 points as well. Meanwhile, at the long-end of the curve, the 10-year yield added 4 basis points to trade at 2.525%, while the 30-year yield traded in the sideways manner around 3.152%.

Fed signaled 3 rates hikes in 2017; something the market was not prepared for. Consequently, the short-duration yields spiked. However, Yellen did a balancing act during the press conference by calling the shift in the dot plot as ‘very modest’.