Treasuries drop as US core inflation tops target

Thursday, 11. July 2019 15:06

Prices of benchmark debt securities issued by the government of the United States weakened on Thursday, which means yields advanced, as traders focused on the annual gain of 2.1% in core consumer prices revealed in official statistics for June. The 0.3% jump month on month was the strongest since January of last year and overshadowed the decline in headline annual inflation by 0.2 percentage points to just 1.6%.

The Federal Reserve, which is closely watching price stability, does prefer the personal consumption expenditures measure but market participants have been clinging on every word of Chair Jerome Powell, who is continuing with the hearing in Congress shortly. The central bank, which targets 2%, remained determined to lower interest rates if economic data continues to disappoint and today's update may complicate the matter.

The two-year US yield was 0.8 basis points higher at 1.84% at 9:04 am ET. The ten-year rate jumped 1.9 points to 2.082% compared to a rise by 1.6 basis points to 2.594% in the 30-year bond yield. Equivalent futures slipped 0.03%, 0.12% and 0.26%, respectively.

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