U.S. Treasury yields were slightly higher Tuesday as investors assessed key inflation data that came in about as expected, adding to expectations the Federal Reserve can wait until later this year to start cutting interest rates.
The yield on the 10-year Treasury rose by 5.5 basis points to 4.158%. The yield on the 2-year Treasury gained 6.7 basis points to 4.60%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Treasurys
The February consumer price index came about in line with expectations, rising by 0.4% for the month, and increasing 3.2% from the year-ago period, according to the Labor Department's Bureau of Labor Statistics. Economists polled by Dow Jones anticipated a 0.4% increase on a monthly basis and a 3.1% rise from a year earlier.
Core CPI, which strips out volatile food and energy prices, gained 0.4% on a monthly basis and was higher by 3.8% on the year. Both figures were slightly higher than economists were expecting.
While the year-over-year figure showed inflation easing from its peak, it remains above the Fed's 2% inflation target, suggesting the so-called "last mile" in tamping out inflation could be challenging. Markets were last pricing in the first rate cut to take place in June.
"In our view, unless inflation starts to drop and come in below forecast, most notably CPI and Core PCE, then we expect the Fed to take a patient and measured approach to any potential rate cuts," wrote Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report. "If there is any notable weakness in the jobs market, that would increase the chance of a Fed rate cut by June."
Last week, Fed Chairman Jerome Powell said rate cuts were likely not far off, but reiterated that the central bank was still looking for more evidence from economic data that inflation is returning to the 2% target.
The report comes ahead of February's producer price index, which is set to release on Thursday. They're among the last major economic data points before Fed leaders convene for their two-day policy meeting next week.
— CNBC's Jeff Cox contributed to this report.