NEW YORK (CNN/Money) - Treasury prices slipped back into the minus column while the dollar traded flat against the euro on Wednesday after the Federal Reserve raised the key federal funds rate by a quarter percentage point to 2.0 percent, as expected.
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At around 4 p.m. ET, the euro was quoted at $1.2898, unchanged from late Tuesday. The euro initially pushed up to as high as $1.3005 in early trading.
Against the yen, the dollar slipped to ¥107.12 from around ¥107.25 shortly before the Fed announcement, but it was still sharply higher than its levels late Tuesday in New York.
Meanwhile, Treasury prices returned to the negative column before their early close at 2:30, after gaining some ground shortly after the Fed announcement.
The benchmark 10-year note lost 5/32 of a point to 99-31/32 to yield 4.25 percent, up from 4.22 percent late Tuesday. The 30-year bond shed 12/32 to 105-29/32 to yield 4.97 percent, up from 4.94 percent late yesterday. Bond prices and yield move in opposite directions.
The two-year note lost 2/32 of a point at 99-10/32 to yield 2.85 percent, and the five-year note fell 3/32 of a point to 99-22/32 to yield 3.57 percent.
The unanimous decision by the U.S. central bank's policy-setting Federal Open Market Committee moves the benchmark federal funds rate -- which affects credit costs throughout the economy -- to 2 percent from 1.75 percent.
The Fed began to lift rates in June from a rock-bottom 1 percent and said in its post-meeting statement it expected to be able to keep on a "measured" course of rate increases.
The latest rise follows Friday's Labor Department report that showed the creation of a surprisingly large 337,000 jobs last month.
A further sign of labor market strength came Wednesday in the form of an unexpectedly small rise in new claims for unemployment benefits last week, implying fewer layoffs. The long-awaited improvement in job prospects should keep incomes growing and bolster vital consumer spending.
"Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved," the Fed said in outlining its rate decision, which also boosted the largely symbolic discount rate to 3 percent.
"The committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity," it added in language that mirrored its prior rate statement and gave no hint of a halt anytime soon.
Bond markets will be closed on Thursday for Veteran's Day.
-- Reuters contributed to the story
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