U.S. Treasury yields ebbed on Thursday morning, as investors clung to hopes that inflation may be starting to peak.
The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.6787% at 4:30 a.m. ET. The yield on the 30-year Treasury bond dipped less than a basis point to 2.791%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasurys
The Bureau of Labor Statistics reported on Wednesday that the March producer price index, which tracks prices paid by wholesalers, rose 11.2% on the previous year, its biggest gain since 2010.
The reading came a day after the latest consumer price index, which showed prices inflated 8.5% in March from the same time last year, it’s biggest increase since 1981. However, the core CPI reading for the month rose just 0.3%, which was below the 0.5% inflation forecast.
This gave investors hope that inflation might be starting to peak, which is key amid expectations of more aggressive interest rate hikes by the Federal Reserve in a bid to curb pricing pressures.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, told CNBC’s “Squawk Box Europe” on Thursday that his firm is more concerned about shelter prices and the “more persistent forces of inflation.”
Shelter costs, which make up about one-third of the CPI weighting, rose 5% year on year in March, the highest since 1991.
Ahmed said demand is starting to fade in some consumer segments, and with a stabilization in oil prices, he believes “some of the very extreme momentum we saw accelerate over the last couple of months [would] ease off.”
Nevertheless, Ahmed said inflation remains high, and the focus continues to be on whether the Fed would go ahead with its aggressive tightening of monetary policy, and “if it remains the case then of course recession probabilities will rise.”
The number of initial jobless claims filed during the week ended April 9 is set to be released at 8:30 a.m. ET.
March’s retail sales numbers, along with last month’s export prices, are also due out at 8:30 a.m. ET.
The University of Michigan’s preliminary consumer sentiment index is slated to come out at 10 a.m. ET.
Investors also continue to monitor developments in the Russia-Ukraine war. U.S. President Joe Biden announced another $800 million in weaponry for Ukraine on Wednesday, following an hour-long phone call with the country’s president, Volodymyr Zelenskyy.
Auctions are scheduled to be held on Thursday for $35 billion of 4-week bills and $30 billion of 8-week bills.
— CNBC.com staff contributed to this market report.
