Bonds

Treasury yields fall even after stronger-than-expected jump in inflation

Share

Treasury yields fell on Friday even after higher-than-expected inflation data.

The yield on the benchmark 10-year Treasury note dropped 2.9 basis points to 1.581% at 2:30 p.m. ET. The yield on the 30-year Treasury bond ticked 2.7 basic points lower to 2.263%. Yields move inversely to prices. One basis point equal 0.01%.

Treasurys

April's core personal consumption expenditures price index, a key measure of inflation, rose 3.1%, hotter than expected. The PCE was expected to have increased 2.9% in April year-over-year, according to economists polled by Dow Jones.

While the gauge came in hot, it was not as worrisome as some market participants feared. Investors have been keeping tabs on inflation data, as the Fed has said it will let it run hotter, arguing that any rising price pressures are "transitory."

The 10-year rate rose to top 1.6% in the previous session, as the number of weekly jobless claims filed last week came in lower than expected. The U.S. Department of Labor said there were 406,000 initial jobless claims last week, below the 425,000 forecasted by economists polled by Dow Jones.

Unemployment data has been closely monitored by investors, given that Federal Reserve is seeking a fuller recovery in the labor market before considering tightening monetary policy.

Despite rising inflation fears, yields will exit May about where they started the month. The 10-year Treasury rate closed out April at 1.63%.

Negotiations in Washington over an infrastructure spending package are also in focus for investors. Senate Republicans presented a $928 billion counteroffer to President Joe Biden on Thursday, well below the White House's latest $1.7 trillion proposal.

Biden is set to share his first full presidential budget on Friday, which is due to come out at 2 p.m. ET.

There are no auctions scheduled to be held Friday.