Treasury Yields Climb Ahead Of Consumer Price Index Inflation Data

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U.S. Treasury yields climbed on Wednesday morning, ahead of the release of the July consumer price index, a key inflation indicator.

The yield on the benchmark 10-year Treasury note rose nearly 3 basis points to 1.371% at 4:25 a.m. ET. The yield on the 30-year Treasury bond added close to 3 basis points, climbing to 2.013%. Yields move inversely to prices. One basis point is 0.01%.

The July CPI index is due to be released at 8:30 a.m. ET. Economists surveyed by Dow Jones expect the index to have risen 0.5% last month, or 5.3% year over year. In June prices jumped 0.9%, which was the biggest monthly increase since August 2008.

Meanwhile, Kansas City Federal Reserve President Esther George is due to speak at 12 p.m. ET on Wednesday.

Investors will be listening to her comments closely, given that two Fed officials this week have already suggested that inflation has now reached the point that would satisfy one part of the central bank’s targets to start paring back its easy monetary policy. Both Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin said on Monday they believed inflation had reached the central bank’s 2% long-term inflation threshold, according to a Reuters report.

Sam Zief, global head of FX strategy at J.P. Morgan Private Bank, told CNBC’s “Street Signs Europe” on Wednesday that he believed both investors and the Fed saw rises in inflation as transitory.

Zief said that inflation appeared to be driven higher in the near term by the reopening of sectors in the economic recovery from the pandemic. He believed investors, therefore, would likely be satisfied that the “Fed isn’t going to overreact” if pricing pressures in these sectors started to cool off.
“If we start to see those inflationary pressures broaden beyond those sectors particularly maybe into wages, then I think the Fed starts to perk up its ears and that’s the kind of thing that could make the Fed move even more quickly,” Zief added.  

Auctions are due to be held on Wednesday for $30 billion of 119-day bills and $41 billion of 10-year notes.


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