US Treasury yields whipsaw after consumer pricing data miss expectations

U.S. government debt yields whipsawed after the government's announcement on consumer prices initially sent rates tumbling Thursday morning.

The Labor Department said that consumer prices rose less than anticipated in August as declines in healthcare and clothing costs offset increases in the price of gasoline and rents. Its Consumer Price Index rose 0.2 percent last month, missing expectations of a 0.3 percent gain.

The so-called core CPI, which excludes volatile food and energy components, inched higher by 0.1 percent.

The yield on the benchmark 10-year Treasury note was lower at 2.957 percent at 1:39 p.m. ET, while the yield on the 30-year Treasury bond was lower at 3.092 percent. Bond yields move inversely to prices.

There's "clearly no sign of higher wages translating to demand-side inflation and nothing to suggest the Fed will have any urgency to accelerate the gradual pace of tightening," Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets, said in an emailed statement.

"That said, this won't take a Sept hike off the table," he added.


Trade disputes continue to rock market sentiment around the globe. News emerged Wednesday that the U.S. was seeking to reignite trade discussions with China. Sources familiar with the negotiations told CNBC that the States was in the early stages of proposing a new round of trade talks with China in the near future.

This comes after a week of turmoil that saw China seeking permission from the World Trade Organization to inflict sanctions on the U.S., and President Donald Trump stating that he was "ready to go" on hitting China with additional tariffs. Consequently, an air of cautiousness lingers for markets around the world.

Elsewhere, central banking news will likely keep bond investors busy Thursday. Atlanta Fed President Raphael Bostic is set to speak at a Mississippi Council of Economic Education event in Jackson, Mississippi. Dallas Fed President Robert Kaplan is set to appear at the Dallas Business Club in Texas.

Overseas, the European Central Bank will held another Governing Council meeting and press conference on Thursday, with the bank sticking to its current monetary policy stance. Elsewhere, the Bank of England published its minutes from its Monetary Policy Committee meeting.