NEW YORK: US Treasury yields were little changed in choppy trading on Friday after an inflation reading was largely in-line with expectations, easing concerns the Federal Reserve may need to be more aggressive in its efforts to combat rising prices.
The consumer price index rose 0.8% last month, just above the 0.7% forecast after a surge of 0.9% in October, the Labor Department said on Friday. In the 12 months through November, CPI accelerated 6.8%, which matched expectations and was the biggest year-on-year rise since June 1982 after a 6.2% advance in October.
“Well, it could have been worse. The prospect of slightly less accommodative policy by the Fed probably helped front-run any really negative spin on these numbers,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.
“The month-on-month change in CPI was ever so slightly better than last time, so that provides a modicum of comfort.” Other data from the University of Michigan showed its preliminary Consumer Sentiment Index unexpectedly rose in early December.
The data comes ahead of next week’s Fed policy meeting, the last of the year, and after comments last week from central bank Chair Jerome Powell took a more hawkish tone. The yield on 10-year Treasury notes was up 0.2 basis points to 1.489%.
Yields steadily moved lower until bottoming out around midday and have since slowly climbed higher. US equity indexes were solidly higher and the S&P 500 was on track for its best weekly gain since early February.
After seeing its biggest weekly drop since June 2020 last week, the yield on the 10-year began this week by climbing for three straight days, its longest daily streak of gains since mid-October as concerns about the severity of the new coronavirus variant Omicron waned. The benchmark yield is up about 13 basis points for the week, on pace for its biggest weekly move higher since early October.
The yield on the 30-year Treasury bond, was up 1.6 basis points to 1.883%. A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 82.7 basis points, narrowing from a high of 83.8 on Thursday.