The bond market's reaction to the Federal Reserve's latest tightening of credit suggests a sea change in investor attitudes that bodes well for Treasury securities, analysts said.

Bonds rallied Tuesday after the Fed increased both the discount and federal funds rates by 50 basis points, citing the need to contain inflation pressures in the face of strains on U.S. manufacturing capacity. The rally was fueled by enthusiasm over the size of the rate increases coupled with the belief that the central bank will not need to raise rates for awhile.

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