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U.S. Treasury yields rose on Friday, after the July consumer price index came in below expectations, with traders now looking ahead to wholesale inflation data.
As of 3:45 a.m. ET, the yield on the benchmark 10-year Treasury note was up by around 2 basis points at 4.1055%, while the yield on the 30-year Treasury bond added almost 3 basis points to 4.2604%. Yields move inversely to prices.
The July CPI indicated that prices rose by 3.2% year-on-year, slightly below the 3.3% consensus forecast among economists polled by Dow Jones. However, the core CPI reading, which excludes volatile food and energy prices, increased by an annual 4.7%.
Tiffany Wilding, managing director and economist at Pimco, said the Thursday data would be welcomed by the Federal Reserve. Traders are closely watching several key data points to gauge whether the central bank will need to hike interest rates again in September and for how long monetary policy will stay tight.
“After inflation was stubbornly firm in the first part of the year, the U.S. economy continues to look on track for meaningful disinflation in the second half of the year,” Wilding said.
“We continue to expect core CPI to end the year around 3.3% y/y. Still, we think Fed officials are likely to remain in data dependence mode for now, and will wait for further evidence of the economy slowing before declaring victory.”
Investors are awaiting more economic data out on Friday, with the July producer price index due at 8:30 a.m. ET, while preliminary consumer sentiment data will be released at 10 a.m.
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