By Yasin Ebrahim
Investing.com -- The 2-year Treasury yield on Tuesday soared to its highest level since 2007 as Federal Reserve Jerome Powell's hawkish remarks ramped up bets on a return to aggressive rate hikes at the central bank's March meeting.
The 2-year Treasury yield, which is more sensitive to rate hikes, jumped 12 basis points to 5.021%, the highest level since 2007.
The move arrived hours after Powell indicated the Fed could step up the pace of tightening after a downshift in February following strong economic data. About 67% of traders now expect the Fed to deliver a 50 basis point rate hike at its March 21-22 meeting, compared with just 24% prior to Powell's remarks.
"As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said in testimony before the Senate Banking Committee.
The Fed chairman also said that “if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”