U.S. bond yields slipped lower Friday as traders awaited the July latest producer price index data following data on consumer price inflation on Thursday.
What’s happening
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was 4.81%, down 2.5 basis points.
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 4.09%, down 2.1 basis points.
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 4.25%, up 2.2 basis points.
What’s driving markets
Even though July consumer price index data matched market expectations, yields on Thursday moved higher after a weak auction of 30-year securities, and as San Francisco Fed President Mary Daly said the central bank wasn’t willing to declare victory on inflation just yet. The yield on the 10-year rose by 8 basis points, and the 30-year yield rose by 6 basis points.
“Amid runaway government deficits and the Treasury increasing its debt issuance both in size and duration, the balance of power seems to be shifting in favor of higher yields,” said Marios Hadjikyriacos, senior investment analyst at XM.
There’s more inflation data on tap on Friday, when the producer price index for July is released.
“The recent rebound in oil prices, if persists, points to the risk of a pickup in the second half of the year, although today’s data may have been collected too early in the month to show this,” said Rhys Herbert, senior economist at Lloyds Banking Group.
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