2-Yr Treasurys Rebound, Long-Dated Bonds Lower On Fed Statement

Nov 4th, 2009 - Wall Street Journal

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NEW YORK (Dow Jones)--Prices of short-dated Treasurys rebounded Wednesday afternoon after the Federal Reserve kept its commitment to hold short-term interest rates near zero for an extended period of time, disappointing investors who had bet on a more hawkish stance.

Many investors had speculated that the Fed would remove the phrase "extended period" to allow policy makers more flexibility to unwind the massive monetary stimulus, paving the way for an eventual boost in interest rates to prevent inflation. The yield on the two-year note is among the most sensitive to changes in the official rate outlook.

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