US Treasury yields fell on Wednesday after monthly consumer inflation data came in weaker than expected.
The rate on the 10 year voucher fell about 10 basis points to 4.344%. THE Cash flow over 2 years the yield was last at 4.726% after sliding about 9 basis points.
Yields and prices move in opposite directions. One basis point equals 0.01%.
THE consumer price index rose 0.3% from March to April, slightly below the 0.4% consensus forecast of economists surveyed by Dow Jones. The measure of a basket of goods and services on an annualized basis increased by 3.4%, in line with expectations.
This monthly decline may offer good news to market participants hoping the Federal Reserve has seen enough impact from its rate-hike campaign to begin reducing the cost of borrowing as soon as possible. The market is now “watching closely” whether expectations of an anticipated rate cut rise, according to Quincy Krosby, chief global strategist at LPL Financial.
“The Fed will certainly need a series of calmer reports to adjust its rate easing schedule, but the CPI report suggests the path to 2% is a little less bumpy,” Krosby said.
The core CPI, which excludes food and energy prices, rose 0.3% from the previous month and 3.6% from a year earlier. Both were as expected.
The data arrives one day after producer price index for April, which tracks wholesale prices, was higher than expected on Tuesday. It rose 0.5% from the previous month, the Labor Department's Bureau of Labor Statistics reported, higher than the 0.3% increase estimated by economists surveyed by Dow Jones.
Following the release of the PPI, Federal Reserve Chairman Jerome Powell suggested on Tuesday that the central bank will have to be patient because inflation remained at a higher level for longer than expected.