Treasury sell-off continues after divided Fed holds interest rates steady

U.S. Treasury yields rose sharply on Thursday as markets reacted to the Federal Reserve's decision to hold interest rates steady at 3.5%-3.75% in a 9-3 vote. The 30-year bond yield surged over 9 basis points to 5.236%, its highest since July 2007, while the 10-year yield climbed above 8 basis points to 4.7%. The Fed cited solid economic activity and stable employment despite Middle East uncertainty. Deutsche Bank analysts predict two 25-basis-point rate hikes in September and December, noting that rising long-end rates and declining forward real yields suggest doubts about price stability. Markets are also awaiting weekly jobless claims and June PCE inflation data, with expectations of 3.7% headline and 3.3% core inflation.