The FOMC Policy Statement caused rates to do what this blog thought that they might. Rates went up based on comments in the FOMC Policy Statement. Specifically the FED’s rate setting committee said, “(S)ustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

"In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

They are saying, in FED speak, that the FOMC is still concerned with inflation, and they will not be lowering rates anytime soon.

Soon after the Policy Statement the rate on the 10-year Treasury shot up to 5.116% which was +.046 over the close of the precious day. Rates moderated some soon after. It is possible that the bond market concentrated on the previous sentence in the Policy Statement. It said, “Readings on core inflation have improved modestly in recent months.”

In good news for the economy as a whole the FOMC summarized, “Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters”

The 10-year Treasury closed at the days high of +.048% with the rate at 5.118%. The price – which moves in opposite direction from the yield was -5/32 at 95&11/32.