By Yasin Ebrahim

Investing.com — Two-year Treasury yields rose to their highest level since 2007 on Tuesday as Federal Reserve Jerome Powell’s aggressive remarks boosted bets on a return to aggressive rate hikes at the central bank’s March meeting.

The index, which is more sensitive to rate hikes, rose 12 basis points to 5.021%, its highest level since 2007.

The move came hours after Powell signaled the Fed may increase the pace of tightening after a February pullback following strong economic data. About 67% of traders now

expects the Fed

to pass a rate hike of 50 basis points at the March 21-22 meeting, compared to just 24% before Powell’s comments.

“As I said, the latest economic data is stronger than expected, suggesting that the eventual interest rate level will likely be higher than previously expected,” Powell said in testimony before the Senate Banking Committee.

The Fed chairman also said that “if the totality of the data indicates that faster tightening is warranted, we would be willing to step up the pace of rate hikes.”