10-Year Yield Rises on Fed Statement

The rate-indicative 10-year Treasury yield has seen a notable increase since Tuesday afternoon in reaction to a statement suggesting the existence of inflationary pressures that accompanied the Federal Reserve Board's expected 25-basis-point hike in the federal funds rate.The 10-year yield rose to 4.6% Tuesday afternoon, above its recent trading range of 4.4% to 4.5%, and remained above that level Wednesday morning, according to Yahoo! Finance. Mortgage-backed securities sold off "sharply" Tuesday afternoon in reaction to the statement, said Art Frank, director of MBS research at Nomura Securities International Inc. He said most of the selling was done by hedge funds and Wall Street Tuesday afternoon. Wednesday morning there were some mortgage industry sellers, but primarily from the servicing side of the business rather than from pipelines, Wall Street sources said.