U.S. Treasury yields fell on Thursday despite another inflation report showing hotter-than-expected price pressures. The 10-year Treasury note yield was down 4 basis points at 4.589%, while the 30-year Treasury bond yield dipped 3 basis points to 4.326%. The Producer Price Index (PPI) increased by a seasonally adjusted 0.4% over the past month, compared to the Dow Jones estimate of 0.3%.
#NewsAlert | Global News: US Jan producer prices rise 0.4% MoM and 3.5% YoY, while jobless claims fall to 213,000 in the Feb 8 week (Agencies)#USEconomy #Inflation #JoblessClaims pic.twitter.com/B2QNMS8ks6
— ET NOW (@ETNOWlive) February 13, 2025
Core PPI, excluding food and energy, was up 0.3%, which aligns with forecasted expectations. However, some underlying details in the report showed a potential easing in price pressures. Personal consumption expenditures (PCE) within the PPI rose 0.3% in January, compared to a 0.7% jump in December.
Treasury yields dip amid inflation concerns
January CPI inflation data: Retail inflation at 4.31%, lowest in 5 monthshttps://t.co/tqj0Q3UO2V
— ET NOW (@ETNOWlive) February 12, 2025
“The PPI for January ran hot on the headline, but some of the details were dovish,” said Adam Crisafulli, founder of Vital Knowledge, in a note. “After the hot CPI on Wednesday, people are viewing the PPI as a welcome surprise.”
A clip from yesterday's @BloombergTV discussion on the latest US inflation numbers and their policy implications.
Thank you @annmarie, @FerroTV and @lisaabramowicz1 for having me on the show.https://t.co/d2dxozqL0F#economy #markets #inflatio. #federalreserve pic.twitter.com/GnGwovU3G7— Mohamed A. El-Erian (@elerianm) February 13, 2025
Earlier in the week, the consumer price index (CPI) showed a 0.5% monthly rise in January and a 3% increase from a year earlier.
Quite a move up in US yields in reaction to the hotter-than-expected inflation numbers.
Needless to say, these moves are pulling up yields elsewhere, including the Eurozone and the UK.#economy #markets #inflation #federalreserve pic.twitter.com/O6fjR1ZwPV
— Mohamed A. El-Erian (@elerianm) February 12, 2025
Core inflation rose 0.4% for the month and 3.3% annually, also higher than anticipated. Federal Reserve Chairman Jerome Powell suggested that the stronger-than-expected inflation data was a reminder of the progress made in bringing inflation closer to the central bank’s 2% target but acknowledged that “it’s not quite there yet.”
While the recent data shows ongoing inflationary pressures, the moderation in specific underlying metrics might offer some hope for investors looking for signs of easing inflation in the near future. This has caused some fluctuation in Treasury yields as investors try to understand the ongoing dynamics between inflation pressures and the Federal Reserve’s policy stance.