Treasuries remained lower as the Federal Reserve said a growth slowdown during the winter months "reflected transitory factors" as they debate the first interest-rate increase since 2006.
Policy makers, who lowered their own forecasts for rate increases last month, said "the pace of job gains moderated" and "underutilization of labor resources was little changed." While officials dropped their pledge to be "patient" in approaching how to normalize policy, Fed Chair Janet Yellen said in a speech late last month that "the return of the federal funds rate to a more normal level is likely to be gradual."
"They're expecting a rebound to occur," David Keeble, the New York-based head of fixed-income strategy at Credit Agricole, said before the statement. "Whereas growth has come in weak, the inflation numbers generally been a little ahead of consensus."
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The yield on the benchmark 10-year note rose two basis points to 2.03 percent as of 2:06 p.m. in New York, according to Bloomberg Bond Trader data.
Job creation, which had been the strongest pillar of growth, stalled in March, breaking a streak of 12 months with more than 200,000 jobs added. Retail sales have fallen below economist forecasts for four months, and durable-goods orders excluding transportation have fallen in five of the past six months.
As oil prices have stabilized, market-based measures of the pace of consumer-price increases have started to climb, though they remain below the Fed's 2 percent target for inflation. Based on a metric known as the break-even rate, traders see inflation averaging about 1.7 percent a year in the next half-decade. That's a half-percentage point higher than at the end of 2014 and the biggest jump over a comparable period in four years.
The Fed has held interest rates near zero since 2008 to support the economy.
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