Treasury yields fell on Thursday despite a hotter-than-expected inflation report. The 10-year yield dropped 8 basis points to 4.554%, while the 2-year yield declined 4 basis points to 4.321%. This drop comes after a surge in Treasury yields on Wednesday following a strong consumer price index (CPI) report.
The CPI rose 0.5% month-over-month and 3% year-over-year, exceeding economists’ expectations of a 0.3% monthly rise and 2.9% annual increase. Core inflation, excluding food and energy costs, also rose higher than anticipated at 0.4% for the month and 3.3% on an annual basis.
However, some market experts suggest that underlying details in the report may indicate a softer-than-expected Consumer Price Index (PCE) measure, which is closely tracked by the Federal Reserve. This could contribute to a rebound in Treasury yields.
According to Adam Crisafulli, founder of Vital Knowledge, “The PPI for January ran hot on the headline, but some of the details were dovish.” Peter Boockvar, chief investment officer at Bleakley Financial Group, noted that persistent inflation is apparent despite some benign components being excluded from the core PCE measure.
Despite these factors, Treasury yields remain lower than their pre-inflation report levels. As such, investors may be focusing on potential easing in price pressures and its implications for the Federal Reserve’s policy decisions.
Source: https://www.cnbc.com/2025/02/13/us-treasury-yields-investors-digest-inflation-data.html