U.S. Treasury yields were mixed on Thursday as investors weighed the latest inflation data and considered the implications it may have for Federal Reserve monetary policy.
At 4:46 a.m. ET, the yield on the 10-year Treasury was down by over one basis point to 4.3380%. The 2-year Treasury yield was last at 4.7382% after rising by less than one basis point.
Yields and prices move in opposite directions and one basis point equals 0.01%.
Investors digested the latest inflation data, which they were hoping would provide fresh hints about the path ahead for Federal Reserve monetary policy.
Consumer price index data released Wednesday rose 0.3% in April from the previous month, which was just below the 0.4% estimate from economists surveyed by Dow Jones. On an annual basis, the CPI increased 3.4% as expected.
The monthly decline was welcomed by investors who have been hoping that data will signal that inflation is cooling, and could move closer toward the Fed’s 2% target range in the coming months, as this could mean the central bank will cut interest rates.
Policymakers have said rates would only be cut once data shows that inflationary pressures are cooling sustainably. Fed Chairman Jerome Powell earlier this week said the central bank would need to be patient as inflation has remained higher than expected.
Powell’s comments came after the producer price index, which tracks wholesale prices, came in higher than expected on Tuesday, reflecting a 0.5% increase on a monthly basis in April.
On Thursday, investors will be following fresh data from the housing sector, including building permit and housing start data for April. More Fed officials are also expected to give remarks in the last days of the week.
