2018.02.2202:06:00UTC+00Yield on U.S. Long Bond Surge on Fed Minutes

Yields on U.S. bonds rallied after the publication of the minutes of the Federal Reserve's January policy meeting.

The U.S. central bank provided a generally upbeat outlook, stating it saw muted risks of the economy overheating even as top Fed officials appeared to raise the prospects for stronger inflationary pressures.

Yield on the 30-year bond or the long bond jumped 6.9 basis points to 3.223 percent, its highest yield since June 2015. The two-year note yield, the most reactive to changes in interest-rate expectations, rose 4.3 basis points to 2.270 percent, recording its seventh consecutive day of yield increases. The yield on the 10-year Treasury note, meanwhile, rose by 4.8 basis points to 2.943 percent, its highest since January 2014.

The recording of the Fed's two-day January meeting were perceived as hawkish by market participants as senior officials of the rate-setting committee said that the outlook for stronger growth this year indicated more rate hikes were on table. The FOMC raised the risk of inflation moving higher, giving long-dated yields more accommodation to run higher. Higher inflation rates tend to be bearish for bonds as they can undermine the value of fixed-interest payments.