US Treasury yields slip after in-line core inflation data
yields drifted lower in choppy trading after data showed underlying inflation in the world's largest economy came in line with expectations, reinforcing expectations the Federal Reserve will hold rates steady at the end of the two-day policy meeting this week.
The decline in yields, however, was much steeper immediately after the release of the data. In morning trading, the benchmark U.S.
10-year yield slipped 1.7 basis points to 4.227%. It dropped as low as 4.15%.
Monday's report showed the core consumer price index (CPI), excluding the volatile food and energy components, increased 0.3% in November after climbing 0.2% in the prior month, meeting economists' expectations.
The core was lifted by a rebound in prices of used cars and trucks.
On an annual basis, core CPI rose 3.1% in November, also in line with forecasts.
The headline CPI though edged up 0.1% on a month-on-month basis in November, after being unchanged in October.
«The broader trends in inflation is intact, with the underlying trend still consistent with something much lower than we have experienced over the last two years but still above the Fed's 2% target, with the last mile the hardest part of the journey,» said Josh Jamner, investment strategy analyst at ClearBridge Investments in emailed comments.
The in-line print «should not change expectations for the Fed being on hold over the next several months, and in turn should lead to steady investor expectations,» he added.
In morning trading, the two-year yield, which typically reflects rate expectations, was little changed to marginally lower at 4.724%.
A closely-monitored part of the U.S. Treasury yield curve, between two- and 10-year notes US2US10=RR, widened its inversion to as much as minus
