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Short-dated U.S. government bonds pulled back and benchmark 10-year notes were little changed Thursday as investors took some chips off the table from a sharp price rally in the prior session.

Investors had piled into the market Wednesday after the Federal Reserve, in its latest interest-rate policy statement, continued to signal a cautious stance on raising interest rates as it downgraded its outlook for both the economy and inflation.

As a result, fears of a rate increase in June have been dialed back. Many investors now expect the Fed will only start raising borrowing costs for the economy in the third quarter and the new tightening cycle will be slow and gradual, unlike the previous rate-increase campaign between 2004 and 2006, when the Fed raised rates 17 meetings in a row.

Short-dated Treasury notes led the pack in Wednesday’s price rally as their yields are the most sensitive to changes in the Fed’s policy outlook. The yield on the two-year note tumbled the most on a one-day basis since 2010.

On Thursday, the yield on the two-year note rose to 0.589% from 0.560% on Wednesday, according to Tradeweb. Yields rise as bond prices fall.

The yield on the benchmark 10-year note was 1.946%, compared with 1.945% Wednesday which was the lowest closing level since Feb. 6.

Traders and analysts warn that investors need to brace themselves for more volatile trades in the months ahead.

By removing the word “patient” from the rate statement, the Fed moves one step closer to lifting the fed-funds target rate, its key policy rate, to influence money flowing in and out of the market. Fed Chairwoman Janet Yellen said in a press conference following the Fed’s statement that the timing of an interest-rate increase depends on the growth and inflation outlook.

“Volatility has increased and is likely to stay elevated given the [Fed’s] flexibility,” said Anthony Cronin, a Treasury bond trader at Societe Generale SA.

The dollar rallied Thursday after a sharp selloff following the rate statement. U.S. crude oil prices tumbled again Thursday after Wednesday afternoon’s rally.

In the bond market, many investors have shed short-term bond holdings and moved cash into long-dated bonds to prepare for the Fed’s fresh tightening campaign. The allocation trade has bolstered demand for long-dated bonds and kept bond yields low.

Another supporting factor for long-dated U.S. bonds is that they offer more attractive yields compared to their peers in Europe and Japan.

Meanwhile, the European Central Bank, which started its bond-buying program on March 9, has sent bond yields in the eurozone to record lows.

On Thursday, the yield on the 10-year German government bond was 0.185%. The yield on the 10-year government bond in the U.K. was 1.558%. The yield on the 10-year government bond in Japan was 0.32%.