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US Treasury yields whipsawed after Federal Reserve chair Janet Yellen said that an increase in interest rates may be “appropriate” at this month’s meeting.

The yield on the policy-sensitive 2-year note touched a seven-and-a-half year intraday high of 1.34 per cent, before paring its losses to trade flat for the day at 1.31 per cent. Yields rise as bond prices fall.

The yield on the 10-year note was 2 basis points higher at 2.5 per cent, roughly where it was before remarks from Ms Yellen’s address in Chicago were published.

Traders put the odds of a quarter-point interest rate rise in March at 96 per cent following her comments, up from 88 per cent immediately before, according to calculations on federal funds futures by Bloomberg.

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