Treasuries decline after April core inflation exceeds forecast
By Bloomberg
Treasuries fell after a report showed core consumer prices rose more than forecast last month, indicating inflation is moving closer to the Federal Reserve’s goal.
Shorter-term notes led losses after the consumer price index, minus food and energy costs, climbed 0.3 percent, the biggest gain since January 2013. Benchmark 10-year notes were set for a weekly decline, even after advancing every day since minutes of the Fed’s April meeting released on May 20 signaled it is unlikely to raise rates in June.
“Given the market reaction, the combination of thin pre- holiday volume and the fact core CPI was up more than expected surprised some people,” said Thomas Simons, a government-debt economist in New York at Jefferies Group LLC, one of the 22 primary dealers that are obligated to bid U.S. debt sales. “This is pretty close to expectations.”
Three-year note yields rose five basis points, or 0.05 percentage point, to 1 percent at 8:39 a.m. New York time, according to Bloomberg Bond Trader prices.
The 10-year yield added two basis points to 2.21 percent. The yield dropped 10 basis points in the previous two days and is up seven basis points since May 15.
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