NEW YORK (MarketWatch) — U.S. Treasury prices fell Wednesday, led by the debt most sensitive to Federal Reserve policy, as the central bank suggested labor market improvement is happening more rapidly.
The minutes of the Fed’s latest policy meeting noted agreement that the labor market is getting stronger, which could eventually bring forward the time frame for rate increases, though officials remained divided on the speed of job gains. The committee agreed that “significant underutilization of labor resources” remained.
Some investors suggested the minutes were more hawkish than expected. Intermediate term Treasury prices fell, sending yields higher. The 5-year note 5_YEAR, -0.49% yield, which is among the securities most sensitive to monetary policy expectations, rose 5.5 basis points on the day to 1.633%.
“I think the scenario that is being priced in here is a high probability of rate hikes starting in the summer of 2015,” said Guy LeBas, chief fixed-income strategist at Janney Capital Markets.
Read: How the Fed could exit its easy-money policy
On Friday, Fed Chairwoman Janet Yellen will give a speech about the labor market at the Jackson Hole, Wyo., economic symposium.
The 10-year Treasury note 10_YEAR, -0.41% yield, which rises as prices fall, was up 2 basis points on the day at 2.428%, according to Tradeweb. The benchmark yield was rose for its third consecutive session after hitting a 14-month low on Friday.
