2025.05.0719:28:00UTC+00Treasuries See Further Upside Following Fed Announcement

Following the upward move seen over the course of the previous session, treasuries saw continued strength during trading on Wednesday.

Bond prices advanced early in the session and remained in positive territory for the rest of the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.3 basis points to 4.275 percent.

Treasuries reached new highs for the session after the Federal Reserve announced its widely expected decision to leave interest rates unchanged but warned of increasing risks of higher unemployment and higher inflation.

In support of its dual goals of maximum employment and inflation at a rate of 2 percent over the longer run, the Fed said it decided to leave the target for the federal funds rate at 4.25 to 4.50 percent for the third straight meeting.

The Fed noted swings in net exports have affected the data but said recent indicators suggest economic activity has continued to expand at a solid pace.

The central bank also said there are risks to both sides of its dual mandate and warned of increasing risks of higher unemployment and higher inflation.

In considering the extent and timing of additional adjustments to rates, the Fed said it will carefully assess incoming data, the evolving outlook, and the balance of risks.

The Fed reiterated it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its dual goals.

The central bank's next monetary policy meeting is scheduled for June 17-18, when Fed officials will also provide their latest projections for the economy, inflation and interest rates.

CME Group's FedWatch Tool is currently indicating a 71.6 percent chance the Fed will once again leave interest rates unchanged next month but a 27.8 percent chance of a quarter point rate cut.