Treasuries rise on weak US producer price growth

Friday, 12. July 2019 18:20

Traders bought on Friday sovereign debt issued by the United States, sending yields lower against the backdrop of interest rate cut expectations as the Federal Reserve has been expressing concern over lagging inflation and hinting it may ease policy. While yesterday's data on consumer price growth came in relative, today's update for June on factory gate levels was more assuring that central bank action is warranted.

Producer price inflation slipped by 0.1 percentage points to 1.7%, the lowest mark since January 2017, while input prices showed a more worrying trend. The index for unprocessed goods for intermediate demand is down on an annual scale for the sixth month in a row. The drop reached 11% and energy slumped 19%, both the most since May 2016.

Two-year US yields tumbled 2.8 basis points at 12:14 pm ET to 1.845%. The ten-year rate dropped 1.5 points to 2.214% and the 30-year yield retreated by one point to 2.651%. Corresponding futures advanced 0.04%, 0.14% and 0.18%, respectively.

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