Treasury yields closed mostly higher after U.S. inflation numbers subsided in the holiday-shortened session.
U.S. Treasury yields were mixed during Friday’s pre-holiday shortened session after data showed inflation continued to slow in November and was moving toward the Federal Reserve’s target.
What kind of return did you get?
The yield on the two-year Treasury note BX:TMUBMUSD02Y fell 1.1 basis points to 4.338% at 2pm ET, the lowest closing yield since May 23, according to Dow Jones Market Data. Yields and debt prices move in opposite directions.
The 10-year Treasury note BX:TMUBMUSD10Y rose 1.4 basis points to 3.907%.
The 30-year Treasury yield BX:TMUBMUSD30Y rose 2.5 basis points to close at 4.059%.
What happen
Treasury yields initially rose after the government reported a 0.1% decline in the personal consumption expenditures (PCE) index last month. Year-on-year inflation slowed to 2.6% from 2.9% in October, the lowest since February 2021.
The core PCE rate, excluding food and energy, rose 0.1% in November, in line with the forecasts of economists surveyed by the Wall Street Journal. Over the past 12 months, the rate of increase in core interest rates has slowed from 3.4% in the previous month to 3.2%. This is also the smallest increase since early 2021.
Live Blog: November PCE Report
Yields then fell, but turned upward again during the session.
In other data, consumer sentiment ended the year on a high, based on an index from the University of Michigan. The government said Friday that durable goods orders rebounded 5.4% in November, the biggest increase since July 2020. And new home sales also plummeted last month.
US bond traders shortened their session on Friday after Sifma called for a 2pm ET close. Meanwhile, US stock markets continued trading throughout the day. Financial markets will be closed on Monday for Christmas Day.
What analysts say
“Of course, it is true that inflation has eased, but the market was biased toward unexpected downside shocks and showed a somewhat counterintuitive price response,” said Benjamin Jeffrey, interest rate strategist at BMO Capital Markets.
