U.S. Treasury yields fell as investors considered the outlook for the economy after key inflation data released Thursday was in line with expectations.
At 7:06 a.m. ET, the yield on the 10-year Treasury was down by 2 basis points at 4.231%. The 2-year Treasury yield was last down by 5 basis points at 4.591%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
Investors considered what could be ahead for inflation and the economy, and how this could inform Federal Reserve monetary policy.
The personal consumption expenditures index, which is the Fed’s preferred inflation gauge, was in line with expectations on Thursday. Headline PCE increased by 0.3% on a monthly and 2.4% on an annual basis in January, while core PCE — which strips out food and energy prices — rose by 0.4% for the month and 2.8% from a year earlier.
The annual figures were slightly lower than December’s readings, but still remained above the Fed’s 2% target range. The PCE data comes soon after both the consumer and producer price index reports for January, which also track inflation, came in hotter than expected.
Atlanta Fed President Raphael Bostic on Thursday said he expected the path to 2% to be “bumpy,” but that rate cuts would likely become appropriate in the summer.
Fed officials have in recent weeks expressed caution about cutting rates too soon and made clear that data would continue to inform their decision-making. Several speakers have indicated rate cuts were expected to come this year, but there have been few clues about a potential timeline.
