WASHINGTON (dpa-AFX) - Following the rebound seen over the two previous sessions, treasuries showed a significant move to the downside during trading on Wednesday.
Bond prices saw modest weakness for much of the day but slid more firmly into negative territory going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 5.7 basis points to 4.259 percent.
The late-day weakness seemed to reflect a negative reaction to Federal Reserve Chair Jerome Powell's comments after the central bank announced its widely expected decision to leave interest rates unchanged.
In his post-meeting press conference, Powell said the U.S. is seeing 'some progress on inflation' but 'not as much as we had hoped.'
While Fed officials' latest projections predict a quarter point rate cut this year, Powell warned that 'you won't see the rate cut' if there isn't further progress on inflation.
Powell also said the Fed is facing a situation where 'the risks to the labor market are to the downside, which would call for lower rates, and the risks to inflation are to the upside, which would call for higher rates or not cutting anyway.'
The Fed chief's remarks came after the central bank announced its decision to maintain the target range for the federal funds rate at 3.50 to 3.75 percent after also leaving rates unchanged after its last meeting in January.
Most Fed officials voted in favor of keeping rates unchanged, although Fed Governor Stephen I. Miran continued to prefer cutting rates by a quarter point.
The modest weakness seen earlier in the day came following the release of a Labor Department report showing producer prices in the U.S. increased by much more than expected in the month of February.
The Labor Department said its producer price index for final demand advanced by 0.7 percent in February after climbing by 0.5 percent in January. Economists had expected producer prices to rise by 0.3 percent.
The report also said the annual rate of growth by producer prices accelerated to 3.4 percent in February from 2.9 percent in January. Yearly growth was expected to remain unchanged.
Along with the recent spike in crude oil prices due to the Middle East war, the data added to recent concerns about the outlook for inflation.
'This isn't the kind of PPI report the Fed wants to see,' said Nationwide Financial Markets Economist Oren Klachkin. 'This report suggests inflation was going to accelerate even before the Iranian conflict hit.'
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