Bonds

10-year Treasury yield advances as producer prices rise more than expected

U.S. Treasury yields rose Friday morning as the producer price index showed that parts of the U.S. economy are still contending with inflation.

The yield on the benchmark 10-year Treasury note added 3.9 basis points, climbing to 1.339%, by 4:07 p.m. ET. The yield on the 30-year Treasury bond rose by 3.5 basis point to 1.934%. Yields move inversely to prices and a basis point is equal to 0.01%.

Treasurys

The producer price index rose 0.7% in August, above the consensus estimate of 0.6%. The reading marked a slowdown from the 1% gain in wholesale prices for July but the index is now up 8.3% year over year, the largest increase since at least 2010.

The index tracks the changes in selling prices received by domestic producers for their output and is one measure of inflation, which is another economic indicator being used by the Fed to determine its timeline for any changes to its policy.

The more important consumer price index for August will be released on Tuesday.

"Bottom line, these are 1970's type inflation readings and while the time periods are obviously different in many ways, it confirms again that we have the most intense inflation pressures since then. As the market will focus more on Tuesday's CPI and the figures today were about as forecasted, bond yields are little changed in response, while higher on the day," Peter Boockvar, Bleakley Advisory Group chief investment officer, said.

Data from the Labor Department on Thursday showed the number of jobless claims filed the week ended Sept. 4 fell to 310,000, the lowest since the coronavirus pandemic took hold. Economists surveyed by Dow Jones expected a print of 335,000.

The Federal Reserve is watching the labor market recovery to help gauge when it will wind down its bond-buying program. The European Central Bank announced on Thursday that it will slow the pace of its asset-purchase program amid surging inflation.

There are no auctions scheduled to be held on Friday.