Bond yields went for a ride on Wednesday and Thursday after the Federal Reserve signaled the likelihood of rate hikes by the end of 2023.

The Federal Open Market Committee on Wednesday released a fresh round of “dot plots,” which map out expectations for where interest rates could be headed over coming years. The chart showed 13 of 18 policymakers projecting at least one rate hike by the end of 2023.

In the immediate aftermath of the forecasts, yields on the U.S. 10-year Treasury (^TNX) rose as much as 10 basis points to 1.59%. But as Federal Reserve Chairman Jerome Powell told reporters that the forecasts are highly uncertain and should be taken with a “big grain of salt,” yields began slipping back down.

Powell also delivered another “hawkish” tilt to the Fed’s aggressive monetary stimulus, by saying the Fed began discussions on tapering the Fed’s $120 billion-a-month pace of asset purchases.

But on Thursday, yields continued to undo Wednesday’s spike, with the 10-year tumbling to as low as 1.47%.

The U.S. 30-year Treasury (^TYX) similarly rose to as high as 2.22% on Wednesday afternoon, before dropping to as low as 2.05% on Thursday.

Although investors may still be digesting the Fed’s policy stance, the reversal of higher bond yields on Thursday suggests that the central bank — for now — has been able to avoid a 2013-like episode where the surprise of taper talks sent bond yields ripping higher.

“The 10-year rate has actually come down over the last few weeks rather than going up," former Fed Governor Randall Kroszner told Yahoo Finance Thursday. "So, that suggests the Fed is credible, the Fed is being believed when they say this is transitory, and they will act when they need to."

Is it priced in?

On one hand, expectations for earlier rate hikes could push bond yields higher, since bond yields tend to act as proxies for interest rates.

Tim Johnson, BNP Paribas Asset Management head of global multi-sector fixed income, told Yahoo Finance Thursday that he expects the 10-year bond yield to rise to about 2% by the end of the year.

"What I think is happening now is the market is really digesting this transition, this change," Johnson said.

But Ellen Gaske and Robert Tipp of PGIM Fixed Income said that bond yields may peak around mid-year, if they haven’t already.

“The sell-off in Treasury yields since March 2020 has already left a substantial buffer—a ‘pricing in’—of Fed rate hikes, giving us reason to believe that any further sell-off in Treasuries should be limited,” Gaske and Tipp wrote Thursday.