Bond yields up on Bernanke's inflation concerns

Bonds, Treasuries, yieldsClick the chart for more bonds-related market data. By Ken Sweet, contributing writer


NEW YORK (CNNMoney) -- Treasury yields edged higher Wednesday, following comments about inflation concerns from Federal Reserve chairman Ben Bernanke.

The price on the benchmark 10-year U.S. Treasury note edged lower, with the yield rising to 3.36% from Tuesday's yield of 3.32%. U.S. 10-year Yields hit their lowest level in a month on Tuesday.

The yield on the two-year note rose to 0.66%, the 5-year note's yield stood at 2.02% and the U.S. 30-year bond's yield rose to 4.46%.

Bernanke, at his first-ever press conference on Wednesday, said that while he believes inflation remains temporary, it does complicate the bank's ability to do more stimulus if necessary.

Bernanke said the bank will end its $600 billion quantitative easing program at the end of June as scheduled.

The chairman said he doesn't expect the Fed to take up a third round of quantitative easing, saying the "trade offs" of any QE program outweigh the economic benefit.

"The inflation picture today is completely different than the one the Fed had back in August [when it started its $600 billion program]," said Mike Pond, chief fixed income strategist with Barclays Capital.

Wednesday's press conference was part of a broad move by the Fed to be more open in its operations both to investors and the general public. They are expected to scheduled quarterly.

While Bernanke and other central bankers believe inflation is temporary, the Fed raised its 2011 inflation forecast. The Fed now sees overall prices to increase 2.1% to 2.8% year over year, significantly more than the 1.3% to 1.7% increase the bank had previously expected.

"Our expectation is that inflation will come down toward a more normal level but we'll be watching that carefully," Bernanke told reporters.

Earlier the Federal Reserve said it would keep interest rates unchanged.

The central bank's Federal Open Market Committee said it would keep interest rates between a range of 0% to 0.25%, the same levels rates have remained at since December 2008. In its statement, the Fed said that while energy and food prices rose in recent months, inflation concerns remain tame.

"The Committee expects [inflation] to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations," the Fed said.

The decision and outlook was widely expected by investors.

"The statement was very consistent with expectations, with what various Fed officials had said, over the past month or so," Pond said. "It was maybe slightly more dovish because there was little acknowledgement of heightened inflation expectations, but overall the statement was very much what was expected." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.01%4.03%
15 yr fixed3.12%2.97%
5/1 ARM3.11%2.99%
30 yr refi4.04%4.09%
15 yr refi3.15%3.05%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 3:17pm ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.