Municipal bonds joined a bond market rout after the Federal Reserve indicated the intention to keep interest rates high for as long as is necessary to curb inflation.
(Bloomberg) — Municipal bonds joined a bond market rout after the Federal Reserve indicated the intention to keep interest rates high for as long as is necessary to curb inflation.
Benchmark top-rated municipal bond yields jumped as much as 10 basis points in morning trading, according to Bloomberg pricing data. The 10-year yield now stands at 3.08%, the highest since November, while the shortest-dated securities are yielding 3.55%.
Long-dated Treasury yields reached new multi-year highs with those on securities due in a decade at the highest since 2007. Meanwhile stocks dropped with the S&P 500 falling about 1% toward its lowest since June.
Read More: S&P 500 Set for Lowest Since June on Fed Jitters: Markets Wrap
The Fed held rates steady on Wednesday at a 22-year high, and most policymakers signaled they would favor one more rate increase this year. Former Federal Reserve Bank of St. Louis President James Bullard told Bloomberg TV’s Michael McKee that the central bank may need to raise interest rates further and hold them higher to guard against the risk of a reacceleration of inflation.
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