Treasury Yields Climb Following Consumer-Price Data

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    Treasury Yields Climb Following Consumer-Price Data

    U.S. government bond yields posted their biggest one-day climb in almost two months Wednesday after new data showed consumer prices surged in April, a sign that the economic recovery is still picking up steam.

    The yield on the benchmark 10-year Treasury note finished the session at 1.693%, according to Tradeweb, up from 1.623% at Tuesday’s close. That marks the largest single-session gain since March 18.

    Yields, which rise when bond prices fall, shot up after the Labor Department reported its consumer-price index jumped 4.2% in April from a year earlier—the highest 12-month level since the summer of 2008—due to supply bottlenecks and surging demand as the coronavirus pandemic eased.

    Rising consumer prices worry bondholders because inflation erodes the value of bonds’ fixed payments and can lead the Federal Reserve to raise interest rates.

    Analysts and investors are parsing through April’s data to gauge the extent of what many expect to be a monthslong rise in prices. Some believe that faster-than-expected growth and inflation, fueled by the distribution of stimulus money and vaccines, may force the Fed to tighten its easy-money policies, which have included holding interest rates near zero and buying billions of dollars worth of bonds.

    Published at Wed, 12 May 2021 20:01:00 +0000

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