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After moved notably higher in morning trading on Wednesday, treasury yields gave back ground following the Federal Reserve's monetary policy announcement.
The yield on the benchmark ten-year note, which moves opposite of its price, reached a high of 1.689 percent, its highest intraday level in over a year.
The ten-year yield subsequently pulled back well off its highs but still ended the day up by 2 basis points at 1.641 percent.
The yield of the five-year note showed a more substantial turnaround, falling by 4.4 basis points to 0.780 percent after reaching a high of 0.862 percent.
The pullback by yields came after the Federal Reserve forecast stronger economic growth and higher inflation this year but indicated it expects to keep interest rates at near-zero levels through 2023.
The Fed provided upbeat forecasts along with the announcement of the its universally expected decision to maintain the target range for the federal funds rate at zero to 0.25 percent.
The central bank also reiterated it plans to continue purchasing bonds at a rate of at least $120 billion per month until "substantial further progress" has been made toward its policy goals.
The Fed said members now expect U.S. GDP to soar by 6.5 percent in 2021 compared to the 4.2 percent spike forecast last December.
The forecast for the pace of growth in core consumer prices, which exclude food and energy prices, was also upwardly revised to 2.2 percent from 1.8 percent.
In its accompanying statement, the central bank acknowledged that indicators of economic activity and employment have turned up recently.
Nonetheless, the median forecast from Fed members predicts interest rates will remain at current levels through 2023.
The Fed once again reiterated that rates will remain unchanged until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation is on track to moderately exceed 2 percent for some time.
The latest forecasts show GDP growth is expected to slow to 3.3 percent in 2022 and 2.2 percent in 2023, while core consumer prices are expected to rise by 2.0 percent in 2022 and 2.1 percent in 2023.
"The updated economic projections released after the Fed's mid-March meeting show that officials expect strong economic growth this year to have only a transitory impact on inflation, which explains why most still aren't thinking about thinking raising interest rates," said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, "With the Fed keen to let inflation run above its target for a while, we expect they will keep rates on hold even if higher inflation proves a little more stubborn than they currently anticipate."
The statement from the Fed once again noted the path of the economy will depend significantly on the course of the coronavirus, including progress on vaccinations.
In U.S. economic news, the Commerce Department released a report showing a substantial decrease in new residential construction in the month of February.
The report said housing starts plummeted by 10.3 percent to an annual rate of 1.421 million in February after slumping by 5.1 percent to a revised rate of 1.584 million in January.
Economists had expected housing starts to decrease by 0.9 percent to a rate of 1.565 million from the 1.580 million originally reported for the previous month.
With the steep drop, housing starts continued to give back ground after reaching a fourteen-year high of 1.670 million in December.
The report also showed a much bigger than expected decrease in building permits, which plummeted by 10.8 percent to an annual rate of 1.682 million in February after spiking by 10.7 percent to a revised rate of 1.886 million in January.
Building permits, an indicator of future housing demand, had been expected to tumble by 7 percent to a rate of 1.750 million from the 1.881 million originally reported for the previous month.
Trading on Thursday may continue to be impacted by reaction to the Fed announcement, although a report on weekly jobless claims is also likely to attract some attention.
