Bond Market Delivers Mixed Verdict on Fed Rate Forecasts

Interest-rate forecasts from Federal Reserve officials sparked a mixed reaction from U.S. bond markets Wednesday, suggesting that investors still have questions on how much the central bank will actually tighten monetary policy.

Selling in short-term Treasurys indicated that investors were once again lifting their expectations for how high interest rates could rise this year. Initial selling in longer-term bonds quickly fizzled, however, in a sign that investors thought that a fast pace of interest-rate increases over the next several months could lead to fewer increases later.