CASH – T-Bill Yields Increase for Day 6, Expect Inflation of Over 5%
Band Yoruk Bahceli
August 11 (Reuters) – U.S. Treasury yields were up for a sixth straight session on Wednesday, pending crucial inflation data that could provide further clues as to when the Federal Reserve can start cutting its bond purchases.
US consumer prices are expected to have risen 5.3% year-on-year in July, according to a Reuters poll, slightly lower than 5.4% last month. The data will follow comments from two U.S. Federal Reserve officials that inflation is already at levels that meet a stage of a key test for policy tightening.
Comments from Fed rate setters, along with better-than-expected US employment data last Friday, halted the sharp drop in yields seen in July and early August.
Ten-year Treasury yields rose three basis points at 8:50 a.m. GMT to 1.376%, the highest since mid-July. That puts them 25 basis points above the 1.127% six-month lows hit last week. US10YT = RR
They are already up more than 6 basis points this week and are gearing up for the strongest two-week high streak since mid-March, when reflation trading was at its peak.
“It can be a bit unpleasant in the Treasury market if there is a high (inflation) number – because those who think the recent surge in inflation is not transient will receive additional ‘ammunition’ “said Jens Peter Sorensen, chief analyst at Banque Danske.
The additional spending hinted at by President Joe Biden’s infrastructure plans could further complicate the inflation outlook, Sorensen added.
The U.S. Senate passed a massive infrastructure bill on Tuesday and kicked off debate on a $ 3.5 trillion additional spending plan for climate change, universal preschool education and affordable housing.
US 30-year yields also edged up, trading at 2.01% after rising the 2% level on Tuesday for the first time since mid-July. US30YT = RR
The spread between two-year and 10-year yields – the so-called yield curve that is considered a reliable indicator of growth prospects – was 112 basis points, the highest since mid-July. US2US10 = RR
The CPI has jumped in recent months https://tmsnrt.rs/3ikn0sV
(Reporting by Yoruk Bahceli; editing by Sujata Rao)
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