U.S. government debt yields held lower Wednesday after the Federal Open Market Committee minutes revealed that Republican tax cuts pushed the Federal Reserve to raise its economic outlook.
on the benchmark 10-year Treasury note traded lower at 2.451 percent at
2:31 p.m. ET, while the yield on the 30-year Treasury bond was down at
2.789 percent. Bond yields move inversely to prices.
trading Wednesday was the release of the FOMC minutes. The document
showed that the central bank decided to adjust its economic outlook
higher in light of the Republican effort to lower the corporate tax
rate. Officials expect the tax relief to bump consumer and firm
Committee members increased their expectations for 2018 GDP growth to 2.5 percent.
month, the Federal Reserve raised interest rates by a quarter point and
hiked its growth outlook for the U.S. economy. The FOMC is the Fed's
monetary policymaking arm. The minutes largely reflected the central
bank's belief in a stronger economy, improved industrial production and
"Obviously the Fed is a little puzzled why
inflation hasn't picked up," said Charlie Ripley, senior investment
strategist for Allianz Investment Management. "They did talk about
taking a look at alternative methods at looking at inflation ... It
feels like the Fed is looking for reasons to raise rates."
part, Ripley believes the central bank is likely to raise rates two to
three times in 2018 despite a current lack of inflation.
data front, yields briefly perked up after the Institute for Supply
Management's (ISM) manufacturing index came in higher than expected for
December. The index increased to 59.7, topping economist expectations of
58.2 according to a Reuters poll and marking the 103rd consecutive
month of growth for the industry.
A reading above 50 for the index indicates expansion in the service sector.
Tuesday, the first trading day of 2018, U.S. markets finished trade
higher with the Dow Jones Industrial Average closing up above 100
U.S. government debt yields started the year higher on Tuesday.
continues to shake up global markets. On Tuesday evening, President
Donald Trump tweeted that that his "nuclear button" was "much bigger and
more powerful" than the one controlled by North Korea's leader Kim
The U.S. incumbent's tweet comes after a New Year's Day
address from Jong-un, who said that the isolated state's nuclear weapons
could reach anywhere in the U.S.
Despite the rising geopolitical
tensions, indexes in Asia and Europe traded higher on Wednesday. U.S.
futures also traded higher.