Share this @internewscast.com

U.S. government bond yields fell after data showed U.S. inflation ended 2021 at multidecade highs. 

The yield on the benchmark 10-year Treasury yield was recently trading at 1.729%, according to Tradeweb, down from 1.745% at Tuesday’s close. 

Yields, which fall when bond prices rise, edged lower in early morning trading, then extended the decline after the Labor Department said the consumer-price index rose 7% in 2021 from a year earlier—the fastest pace since 1982 and the third straight month in which inflation exceeded 6%. 

The so-called core price index, which excludes the often-volatile categories of food and energy, climbed 5.5% in December from a year earlier, the highest rate since 1991.

Some analysts said the move may have stemmed from investors repositioning after the data didn’t shift expectations for the pace of Federal Reserve interest-rate increases in coming months. 

“There is a strong argument to be made that investors were positioned for a more dramatic response,” and began covering bets against Treasurys after the data, wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a note to clients. 

Bond yields climbed sharply to start the year, lifted by expectations the Fed will begin raising rates as soon as March to fight inflation, before stabilizing in recent sessions. During his Senate confirmation hearing Tuesday, Fed Chairman Jerome Powell called high inflation a “severe threat” to a full economic recovery and signaled the central bank was preparing to raise rates because the economy no longer needed emergency support.

Investors that were planning on buying bonds this week may have waited until after the CPI data were released, given that previous reports have been followed by notable market reactions, said Jim Vogel, interest-rate strategist at FHN Financial.

“As soon as [the CPI data] came out and it was not deadly, we may have seen a surge of pent-up demand for Treasurys,” he said.

On Wednesday, the Treasury Department sold $36 billion worth of 10-year Treasury notes at a yield of 1.723%. Investors and dealers submitted bids totaling 2.51 times the amount of debt sold at Wednesday’s auction, slightly above recent averages. Above-average bidding is usually a sign of robust appetite for the debt.

In a confirmation hearing for his second term as Federal Reserve chairman, Jerome Powell said the central bank would use its tools to tamp down inflation. Photo: Graeme Jennings/Press Pool

Write to Sebastian Pellejero at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source: WSJ

Share this @internewscast.com
You May Also Like

Can you earn passive income running a Lightning node?

The prerequisites to run a Bitcoin Lightning node include an amount of…

Denver Nuggets Draft Christian Braun And Jaylen Watson In First Round, Punting On Win-Now Moves

The Denver Nuggets chose Christian Braun with the 21st pick in the…

Solana smartphone Saga triggers mixed reactions from crypto community

The Solana (SOL) team has brought mobile phones to Web3 after revealing…

Should You Buy, Sell, Or Hold Diageo Stock Around $175?

BRAZIL – 2020/01/13: In this photo illustration the Diageo logo is seen…

United Airlines Pilots Strike Tentative Contract Deal to Boost Pay

Leaders of United Airlines’ pilots union signed off on a tentative contract…

Create A National Healthcare Database

One of the most profound problems in American healthcare (and perhaps globally)…

‘Elvis’ Tops With $13 Million, ‘Black Phone’ Grabs $10 Million

‘Elvis’ Courtesy of Warner Bros. Picture Baz Luhrmann’s Elvis topped the domestic…

FTX may be planning to purchase stake in BlockFi: Report

Crypto exchange FTX is reportedly in talks to acquire a stake in…