U.S. Treasury yields declined on Friday as investors looked to the release of the latest instalment of the Federal Reserve’s preferred inflation gauge and assessed the outlook for global monetary policy.
At 4:38 a.m. ET, the 2-year Treasury yield was down by around five basis points to 4.8889%. The yield on the 10-year Treasury was trading at 4.0006% after falling by just over one basis point.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Investors awaited June’s personal consumption expenditures price index — the Fed’s favored inflation measure — which could inform monetary policy decisions ahead. Economists surveyed by Dow Jones are expecting the core PCE, which excludes food and energy, to have risen by 0.2% on a monthly basis and 4.2% from a year ago.
That comes after the Fed’s latest meeting, which saw policymakers hike interest rates by 25 basis points, in line with market expectations, as the central bank continues its efforts to ease inflation and cool the economy.
In a press conference after the interest rate decision, Fed Chair Jerome Powell noted that inflationary pressures had eased, but there was still “a long way to go” before the Fed’s 2% inflation target was reached.
Powell also said that future monetary policy moves would depend on upcoming data, and decisions would be made on a meeting-by-meeting basis.
Personal spending and income data will also be released Friday.
Elsewhere, the Bank of Japan maintained negative interest rates, but loosened its yield curve control policy to allow for what it described as “greater flexibility.” The move was seen by some analysts as a hint that the central bank may eventually shift its monetary policy to a tighter approach.
