Treasury yields were mostly flat Thursday as traders analyzed new U.S. inflation data for clues on when the Federal Reserve might begin cutting interest rates.
THE 10-year Treasury yield rose just 1 basis point to 4.57%. THE Cash flow over 2 years the yield was last at 4.948% after a 2 basis point decline.
Yields and prices have an inverse relationship and one basis point equals 0.01%.
The March producer price index, which tracks wholesale prices, was worse than expected. The PPI rose 0.2% over the month, less than the 0.3% increase expected by economists surveyed by Dow Jones. The core PPI, which excludes volatile food and energy prices, gained 0.2% last month, in line with the consensus estimate.
The data has muddied the inflation picture. Although the weaker PPI report brought some relief to investors worried about persistent inflation, it comes a day after a higher-than-expected consumer inflation report in March sparked fears that the Fed keeps interest rates high.
“Thursday’s weaker-than-expected PPI suggests that inflation data is inherently inconsistent,” said George Ball, president of Sanders Morris. “While it is encouraging to see a lower inflation number, the Federal Reserve will take its time when it comes to lowering rates and the data is still on the expectant side.”
Treasury yields climbed Wednesday following CPI data. The 2-year and 10-year Treasury notes rose 22 and 18 basis points, respectively.
Markets now anticipate a rate cut to begin in September rather than June, according to the CME group’s FedWatch tool.
—Alex Harring of CNBC contributed to this report.
Correction: The March consumer inflation report was released Wednesday. An earlier version had incorrectly stated the day.
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