Prices of Treasury securities headed for the stars yesterday after the Federal Reserve announced an aggressive tightening of monetary policy.

The Fed increased by 50 basis points both the discount rate and the federal funds rate, citing the need to contain inflation pressures in the face of strains on capacity in the national economy. The discount rate rose to 4% from 3.5% and the federal funds rate to 4.75% from 4.25%. The action was identical to that taken by the Federal Open Market Committee on May 17.

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