10-year Treasury yield dips as inflation reading is weaker than expected
U.S. Treasury yields moved lower on Thursday after key inflation data came in slightly cooler than expected.
The yield on the benchmark 10-year Treasury note moved 11 basis points lower to trade at 2.98%, while the yield on the 30-year Treasury bond slid 8 basis points to 3.128%. Yields move inversely to prices.
The core personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 4.7% in May, the Commerce Department reported Thursday. That’s 0.2 percentage points less than the month before, but still around levels last seen in the 1980s. The index was expected to show a year-over-year increase of 4.8% for May, according to Dow Jones.
The Chicago PMI, which tracks business activity in the region, came in at 56, slightly below a StreetAccount estimate of 58.3.
Treasurys
As the second quarter draws to a close on Thursday, concern over a slowing economy and aggressive interest rate hikes from the Federal Reserve continue to dominate market sentiment.
Fed Chairman Jerome Powell on Wednesday said that policymakers would not allow inflation to take hold of the U.S. economy over the longer term.
Speaking at a European Central Bank forum, Powell said it’s important to arrest long-term inflation expectations so that they don’t become entrenched and create a self-fulfilling cycle.
“We’re strongly committed to using our tools to get inflation to come down. The way to do that is to slow down growth, ideally keeping it positive,” he said. “Is there a risk that would go too far? Certainly, there’s a risk. I wouldn’t agree that it’s the biggest risk to the economy. The bigger mistake to make … would be to fail to restore price stability.”
— CNBC’s Jeff Cox and Elliot Smith contributed to this report.
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