Bonds

Treasury yields climb as investors digest higher inflation prints

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Bonds yields rose on Tuesday, as investors digested last week's inflation data and look ahead to Friday's all-important jobs report.

The yield on the benchmark 10-year Treasury note ticked up to 1.616% in afternoon trading, while the yield on the 30-year Treasury bond rose to 2.298%. Yields move inversely to prices.

Treasurys

Inflation is even more in focus since the release of April's core personal consumption expenditures price index last week, a key measure of inflation, which rose 3.1% — hotter than expected. Gold, which often is used as an inflation hedge, is still holding above a key level of $1,900.

On Tuesday, the ISM manufacturing report for May came in roughly in line with expectations, showing continued strong growth, rising commodity costs and higher prices. However, the increase in prices slowed slightly from the previous month.

The report also said companies were reporting that labor market issues could limit growth potential going forward.

On Tuesday, Federal Reserve Governor Lael Brainard told the Economic Club of New York that the mismatch between supply and demand in some industries was temporary and that the central bank's goal was "to ensure that inflation expectations are strongly anchored at 2%," according to the club's Twitter account.

Fed Vice Chair Randal Quarles spoke at a virtual event for Politico on the economy and financial regulation earlier in the day.

Looking ahead, investors are also eyeing Friday's jobs report. Economists expect the data to show the creation of around 674,000 jobs in the month of May, after April's read came in below expectations at 266,000.

Negotiations in Washington over an infrastructure spending package remain in focus, as Democrats discuss plans to 'go it alone' with a sweeping spending package after Senate Republicans presented a $928 billion counteroffer to President Joe Biden on Thursday, well below the White House's latest $1.7 trillion proposal.

Transportation Secretary Pete Buttigieg said Sunday that Senate Democrats and Republicans must establish a clear direction on infrastructure by June 7.

Auctions for U.S. 3-month and 6-month Treasury bills were held Tuesday.