US Treasury yields rise as inflation data points to smaller rate cut
PCE price index rose 0.2% in July, matching expectations
Consumer spending rose 0.5% in July
Market focus shifts towards jobs and labor over inflation
Updated at 2:17 p.m. ET/1817 GMT
By Chuck Mikolajczak
NEW YORK, Aug 30 (Reuters) -U.S. Treasury yields advanced onFriday, with the benchmark 10-year note set to snap a two-week streak of declines, after economic data raised expectations the Federal Reserve was likely to opt for a small rate cut at its September meeting.
The Commerce Department said the personal consumption expenditures (PCE) price index rose 0.2% last month, matching expectations of economists polled by Reuters, after an unrevised 0.1% gain in June. In the 12 months through July, the PCE price index increased 2.5%, matching June's gain.
"Income and spending were a little better than expected while inflation was in line with expectations. This can reinforce the idea that the Fed has stuck the landing," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month, also meeting expectations, after advancing by an unrevised 0.3% in June to show a strongeconomy early inthe third quarter.
"The market's focus is shifting more towards jobs and labor rather than inflation. It feels like the market's pretty well convinced that inflation is moving in the right direction," said Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas.
"As long as it continues to move in that direction, then the focus is going to be on growth and in the job market."
The U.S. 10-year Treasury note yield US10YT=RR rose 3.8basis points to 3.905%, on track for its fifth straight daily gain andfirst weekly rise in three. However, the yield was still on course for fourth straight monthly decline.
Markets are fully pricing in a rate cut of at least 25 basis points at the Fed's mid-September meeting. Expectations for a 50 basis point cut dipped to 30.5% after the data, however, from 34% on Thursday, CME's FedWatch Tool showed.
The 30-year bond yield US30YT=RR climbed4.4 basis points to 4.196%. The yield wasset to snap a two-week streak of declines but was alsopoised for a fourth straight monthly drop.
Fed Chair Powell last week flagged the cooling in the labor market, which signaled a shift in the Fed's focus towards the job market over fighting inflation.
A survey from the University of Michigan showedconsumer sentiment edged up to 67.9 in August from July's eight-month low of 66.4, snapping a four-month slide, while inflation is expected to continue to moderate.
A closely watched part of the U.S. Treasury yield curve measuring the gap between two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was at a negative 2 basis points.
The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 3.2basis points to 3.925%. The yield was barely higher onthe week but set for a fourth consecutive monthly decline.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=RR was last at 2.046% after closing at 2.057% on Aug. 29.
The 10-year TIPS breakeven rate US10YTIP=RR was last at 2.154%, indicating the market sees inflation averaging about 2.2% a year for the next decade.
Annual change in US Personal Consumption Expenditures Price Index https://reut.rs/4e6gAHN
Reporting by Chuck Mikolajczak; editing by Barbara Lewis and Richard Chang
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
