The 10-year U.S. Treasury yield fell Friday as traders analyzed closely watched inflation data released earlier in the day.
The 10-year Treasury yield slipped about 4 points to 4.667%. The yield on the Cash flow over 2 years lost almost a basis point to trade at 4.987%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
The price index for core personal consumption expenditures excluding food and energy in March came in at 2.8% on an annualized basis, slightly above the 2.7% rate expected by economists surveyed by Dow Jones. Including food and energy, the Fed’s preferred inflation gauge rose 2.7% from last year, also above the consensus forecast of 2.6%.
Both metrics rose 0.3% month-over-month, in line with expectations.
“There was no surprising news,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “This is largely in line with expectations, or at least previous figures, suggesting once again that inflation is moderating at least to a point that keeps the prospect of a rate cut or two on the table .”
During the previous session, yields on the 10-year and 2-year Treasury notes rose to their highest levels since November. This followed the release of a weaker-than-expected US gross domestic product figure.
GDP grew 1.6% in the first quarter, well below the 2.4% expected by economists surveyed by Dow Jones. The report also said consumer prices rose much more than in the previous quarter, raising new concerns about continued inflation and the outlook for the Federal Reserve’s monetary policy.
The releases come ahead of next week’s Fed policy meeting, during which the central bank is expected to keep rates unchanged. Uncertainty remains regarding the directions that policy makers could give regarding interest rates.
The question of whether there could be fewer rate cuts than expected this year, or even no rate cuts before 2025, has emerged in recent weeks as market expectations over when the first rate cut will take place were pushed back.
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