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Bond Report: U.S. Treasury yields hold ground even as inflation picks up

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U.S. Treasury yields held their ground in early Friday trade as investors looked past consumption and inflation data that confirmed the U.S. economy’s strength last month.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.639%

was up 0.6 basis point to 1.645% The 2-year note rate
TMUBMUSD02Y,
0.168%

was steady at 0.168%, while the 30-year bond yield
TMUBMUSD30Y,
2.301%

edged 0.5 basis point lower to 2.305%.

What’s driving Treasurys?

The
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of personal consumption expenditures was up 0.5% in March, leaving it up 2.3% year-over-year. Personal incomes jumped 21.1%, marking its largest gain on record, while consumer spending surged 4.2%

The data reflects the momentum behind the U.S. recovery as hundreds of billions of dollars in direct government checks course through households and vaccinations cover close to half the U.S. population.

Analysts had been anticipating an upswing in inflation readings over the next few months, but it’s a larger question whether the price pressures can persist into the end of the year. The Federal Reserve on Wednesday described the recent rise in inflation as “transitory,” suggesting it would look past recent data.

What did market participants say?

Tom di Galoma of Seaport Global Securities said he was “looking for higher rates as the calendar flips from April to May on stronger economic data and heavy Treasury supply,” in a note.

See: Powell’s dovish pose is leaving the bond market vulnerable to an inflation surge

Market Snapshot: U.S. stock futures slip as hectic week of earnings comes to a close

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