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Treasury yields were mixed early Thursday as investors awaited economic data, including U.S. March retail sales, and continued to assess the path for inflation.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.663%
edged up to 2.69%, compared with 2.688% at 3 p.m. Eastern on Wednesday -
The 2-year Treasury yield
TMUBMUSD02Y,
2.323%
was 2.332% versus 2.34% on Wednesday afternoon. -
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
2.784%
stood at 2.809%, up from 2.795% late Wednesday.
Market drivers
Treasury yields have pulled back from their highest level in more than three years even after data this week that showed inflation continued to accelerate in March, with the consumer price index showing its fastest rise since 1981. A slower rise in the core rate of inflation — excluding food and energy — has prompted some investors, economists and policy makers to gauge that inflation has peaked.
Fed Gov. Christopher Waller told CNBC on Wednesday that he was forecasting that “this is pretty much the peak” in inflation. Waller stuck to his call for aggressive monetary tightening though, saying he would back a half percentage point benchmark interest rate hike in May and possibly June and July, reiterating the importance of getting the fed-funds rate above the neutral rate — the level at which it neither accelerates or slows the economy — in the second half of the year.
The European Central Bank will release a policy statement at 7:45 a.m. ET that will be watched for a more specific timetable for wrapping up its asset-buying program, while investors will also look for clues to its plans for eventually raising interest rates.
U.S. data on tap Thursday include weekly claims for unemployment benefits, along with March retail sales and a March reading of an import price index at 8:30 a.m. ET. The University of Michigan’s preliminary consumer-sentiment index reading for April is due at 10 a.m.
What analysts say
“We’re impressed with the market’s ability to rally through supply this week with the only trigger being the ‘soft’ core read on the consumer price index,” wrote Ian Lyngen and Benjamin Jeffery, strategists at BMO Capital Markets, in a note.
“Attributing too much of the move to the modest deceleration of inflation would be analytical folly; however, there is something to the notion that the U.S. rates market has been squarely in bond-bearish mode up until the inflection offered by the details within the core series,” they said.
