Treasury yields tanked on neutral Fed

The yields on the short duration and long duration treasury yields tanked after the Fed raised rates by 25 bps as expected, but kept the dot plot for 2017 and 2018 unchanged. 

The benchmark 10-year treasury yield fell from the high of 2.6% to 2.49%; the lowest level since 2017. The 2-year yield, which mimics short-term rate hike bets, dropped from the high of 1.401% to 1.303%. 

The Fed boosted the fed funds rate to a range of 0.75% to 1% as expected and also kept its interest rate forecasts unchanged. The sharp drop in the treasury yields suggests that many in the markets were expecting that Fed would add an extra hike to its 2017 forecasts.