NEW YORK, Dec 18 (Reuters) - U.S. Treasuries prices trimmed losses on Wednesday after the Federal Reserve decided to reduce the size of its stimulus program by $10 billion a month, which initially surprised some traders who had reckoned such a move would not happen until early 2014.
A knee-jerk sell-off ensued in the minutes following the tapering news but traders turned their focus on the market-friendly aspect of the U.S. central bank's policy statement, which hinted at the possibility it might hold short-term interest rates low into 2016 if job growth remains sluggish and inflation is stuck below its 2 percent target.
Benchmark 10-year Treasury notes last traded down 7/32 in price with a yield of 2.867 percent, up 2 basis points from late on Tuesday. They had traded as much as 23/32 lower with a yield of 2.929 percent, within striking distance of a three-month high.
(Reporting by Richard Leong; Editing by James Dalgleish) Keywords: MARKETS USA BONDS/FOMC
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