U.S. Treasury yields declined on Thursday as investors looked to the release of January’s producer price index (PPI) and assessed how it could affect the Federal Reserve’s next monetary policy moves.
At 4:18 a.m. ET, the yield on the 10-year Treasury was trading at 3.7704% after falling by more than three basis points. The 2-year Treasury yield was last down by over four basis points to 4.5848%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
On Thursday, investors are expecting the latest reading of the PPI, which reflects how prices of goods and services change for producers. Economists are anticipating the PPI to have increased by 0.4% on a monthly basis in January, according to a Dow Jones survey.
In December, the PPI declined by 0.5%, leading many investors to believe that inflation was easing.
On Tuesday, the consumer price index report for January showed that consumer inflation increased by 0.5% throughout the month.
In recent weeks, various Fed officials, including Chairman Jerome Powell, have indicated that the central bank will base future policy decisions on economic data. That includes whether there will be further interest rate hikes and how big they will be.
The Fed has implemented eight rate increases since March 2022 in an effort to slow the economy and bring inflation down. Concerns about rates being hiked too high, too quickly and whether that would lead to a recession have spread among investors.
They will therefore be scanning remarks from Fed officials due to speak on Thursday for hints about the policy outlook.
Weekly initial jobless claims and housing starts figures are also due to be released on Thursday.
