TREASURIES-U.S. yields rise on robust inflation data

NEW YORK, Jan 12 (Reuters) – Treasury yields climbed on Friday as underlying U.S. consumer prices posted their biggest gain in 11 months in December, increasing expectations about a pickup in domestic inflation.

The two-year yield, which is sensitive to traders’ views on interest rates, reached its highest since September 2008. The jump in yield implied higher market confidence the U.S. Federal Reserve will enact its planned rate hikes for the year.

The Labor Department said its Consumer Price Index, excluding the volatile food and energy components, rose 0.3 percent last month, amid strong gains in the cost of rental accommodation and healthcare.

The suggestion that inflation may be rising also kicked up the 10-year yield, which indicates the market’s long-term confidence in the economic health of the United States. In the past year, inflation has remained stubbornly lower than the Fed’s target rate of 2 percent, even amid strong GDP and employment data.

At 8:54 a.m. (1354 GMT), the yield on 10-year government notes was 2.588 percent, up from 2.531 percent at Thursday’s close. The yield on two-year government bills hit a high 2.022 percent, before falling slightly to 2.018 percent at 8:56 a.m. (1356 GMT).

Other data show that U.S. retail sales increased in December as households bought a range of goods and figures for the prior month were revised higher, suggesting the economy exited 2017 with strong momentum.

Reporting by Kate Duguid; Editing by Bernadette Baum

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TREASURIES-U.S. yields rise on robust inflation data
TREASURIES-U.S. yields rise on robust inflation data

Rents boost U.S. core CPI; retail sales rise solidly

WASHINGTON Underlying U.S. consumer prices recorded their largest increase in 11 months in December amid strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will accelerate this year.

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TREASURIES-U.S. yields rise on robust inflation data

The U.S. House of Representatives on Thursday passed a bill to renew the National Security Agency’s warrantless internet surveillance program, overcoming objections from privacy advocates and confusion prompted by morning tweets from President Donald Trump that initially questioned the spying tool.  Full Article 

Source: Reuters

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