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US Treasury yields fell on Friday after a key inflation reading came close to economists’ expectations, indicating that inflation pressures may ease slightly.
The benchmark 10-year Treasury bill yield fell 4 basis points to 1.231% at 4:00 p.m. ET. The 30-year Treasury bill yield fell 1.9 basis points to 1.897%. Yields move in the opposite direction to prices. One basis point is equal to 0.01%.
The personal consumption expenditure index – the Federal Reserve’s preferred measure of inflation – rose 3.5% in June from a year earlier. Economists polled by Dow Jones expected a 3.6% jump.
The core PCE index was up 0.4% month-on-month, below the Dow Jones’ estimate of 0.6%, indicating that inflationary pressures may ease, at least one little.
The June reading “was the second consecutive deceleration of the [month-over-month] pace of core PCE – consistent with the idea that inflation may have peaked at the moment, ”BMO Capital Markets’ Ian Lyngen said in a note.
Despite lower-than-expected inflation figures, the 3.5% gain in the PCE price index in June was the biggest move since 1991.
“Today’s report was still a large number even though it was lower than investor expectations. It will at least be the downfall before we really know how transient inflation is. Our opinion earlier in the ‘year was rates were going up too far, so we’ve probably overcorrected downwards for now, ”said Jason Blackwell, chief investment strategist at The Colony Group.
The Fed said in its latest policy decision on Wednesday that if progress had been made on economic targets, “further substantial progress” would be needed on its inflation and employment targets before considering a tightening of its economy. ultra-relaxed monetary policy.
The trend on the 10-year rate is downward over the year. Five months ago, it peaked above 1.7%, but fell back, hitting a new low earlier this month and settling in the 1.25% range since.
—Tanaya Macheel and Michael Bloom of CNBC contributed reporting.
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