Treasury yields extend pullback from 8-month highs after inflation data

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Yields on US Treasuries fell early Wednesday after a release of key economic data showed inflationary pressures were still contained during the pandemic. The yield of the 10-year Treasury note TMUBMUSD10Y, 1.122% fell 0.5 basis points to 1.133%, extending its decline after touching its highest level since March on Monday, while the rate of the 2-year note TMUBMUSD02Y, 0.148 % rose 0.4 basis points to 0.151%. The yield on the TMUBMUSD30Y 30-year bond, 1.860% fell 1.7 basis points to 1.868%. Bond prices move inversely to yields.

What drives the Treasurys? In economic data from the United States, the consumer price index for March December registered an increase of 0.4%, in line with analysts’ estimates. Excluding food and energy prices, the core inflation indicator increased 0.1%. The data release offers a snapshot of inflationary pressures after bond traders turned bearish on long-term Treasuries this month amid fears that a more aggressive fiscal agenda under Biden could boost growth. and potentially pushing the Federal Reserve off the pedal earlier than expected. That is why investors will also pay attention to speeches by senior Fed officials for clues on when the central bank may reduce its asset purchases. Fed Governor Lael Brainard and Fed Vice Chairman Richard Clarida will speak later today. Some supply will also enter the market, with an auction of $ 24 billion of 30-year bonds that mature in the afternoon. What did market participants say? “The overnight stabilization episode in the Treasury market in which 10-year yields fell to 1.105% reinforces the observation that the initial bearish wave appears to have run its course,” said Ian Lyngen, chief rate strategy guide at BMO Capital. Markets