Bonds

Treasury yields fall slightly, shaking off another hot inflation report

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U.S. Treasury yields fell slightly on Thursday after more hot inflation data.

The yield on the benchmark 10-year Treasury note fell about 3 basis points to 1.67% at around 3:00 p.m. ET. The yield on the 30-year Treasury bond dipped 2 basis points to 2.4%. Yields move inversely to prices.

Treasurys

April's Producer Price Index rose 0.6% from the previous month, compared to the rise of 0.3% estimated by economists, according to Dow Jones. The gauge spiked 6.2% for the 12 months ended in April, according to the U.S. Bureau of Labor Statistics, marking the largest increase since the agency started tracking the data in 2010. Year over year, the index was expected to rise by 3.8%, according to FactSet.

PPI is also an indicator of inflation, though not as direct as CPI, as it looks at price growth from the perspective of producers.

The 10-year yield closed the previous session at 1.70%, it's highest point in over a month, after a key inflation report showed prices increased faster than expected. April's Consumer Price Index rose 4.2%, its biggest year-on-year increase since 2008 and well above the consensus forecast of 3.6%.

Inflation has been a growing concern for investors, but the Federal Reserve has insisted any price rises should be transitory, pointing to the re-opening of the economy in the recovery from the coronavirus pandemic.

Carl Weinberg, chief economist at High Frequency Economics, told CNBC's "Squawk Box Europe" on Thursday that he agreed with comments made by Fed Vice Chair Richard Clarida following the inflation report, that the price rises looked to be transitory.

Weinberg believed that part of reason for this "transient shock" in inflation was that people had been spending much more on goods than services, with the sector closed due to public health restrictions in the last year.

He believed it was a case of waiting "a month or two and things, I think, are going to look a lot better on the inflation front and the growth front when we get to the end of the summer."

Fed Governor Christopher Waller is the latest central bank member to make a speech this week on the U.S. economic outlook and monetary policy, at the Global Interdependence Centre's 39th Annual Monetary and Trade Conference, at 1p.m. ET.

Auctions will be held Thursday for $40 billion of four-week bills, $40 billion of eight-week bills and $27 billion of 30-year bonds.