Treasury yields climb Friday, 10-year posts biggest weekly yield jump in a month while inflation cools


U.S. Treasury yields rose on Friday, with the 10-year Treasury notching its biggest weekly yield climb in a month, even though data for December showed a further cooling in the Federal Reserve’s preferred measure of inflation.

What’s happening
  • The yield on the 2-year Treasury

    rose 2.9 basis points to 4.205% as of 3 p.m. Eastern. Yields move in the opposite direction to prices.

  • The yield on the 10-year Treasury

    advanced 2.6 basis points to 3.517%.

  • The yield on the 30-year Treasury

    gained 0.5 basis points to 3.632%. It fell 2.3 basis points over the week.

  • But it was the biggest weekly yield gain for the 2-year and 10-year rates since Dec. 30, according to Dow Jones Market Data.

What’s driving markets

The focus Friday was the release of economic data showing the annual increase in the cost of U.S. goods and services pulled back to 5% in December from 5.5% a month before, signaling further progress in the Fed’s inflation fight.

The Fed’s preferred measure of inflation — the PCE price index — peaked at 7% last summer, helped along by a retreat in energy prices, but remains high above the central bank’s target of 2%.

Another economic report on consumer spending on Friday showed a 0.2% decline in December as households spent less on gas, cars and other goods, but more on services. It also indicated the U.S. economy entered the new year with fading growth prospects and rising odds of recession. Analysts polled by The Wall Street Journal had forecast a 0.1% decline.

“A number of indicators are flashing red lights that a recession may be upon us,” Bill Adams, chief economist at Comerica Bank, said in emailed comments. “With cooler inflation and increased signs that the economy may have in fact turned, financial markets are pricing in a smaller quarter percentage point rate hike for the Fed’s decision next week — and are now also pricing in the possibility that the Fed holds rates unchanged at their following decision in March.”

The PCE index released was one of the last data released ahead of the Federal Open Market Committee decision on Wednesday.

Read: Fed set to deliver quarter-point rate hike along with ‘one last hawkish sting in the tail’

What strategists are saying

“Next week is one for the record book,” BofA Global’s rates team lead by Ralf Preusser said Friday in a client note.

Never before has the team seen the Federal Reserve, the European Central Bank and the Bank of England all been on deck to deliver policy decisions in the same week as a torrent of global economic data — from updates on the U.S. labor market to inflation in the Euro Area — plus, month-end fund flows, they said.

“Our economists remain hawkish relative to market pricing, expecting a terminal [fed funds] target range of 5.00-5.25%. and the first cut not until Mar-2024, for which forwards price 100 bp more cuts than our colleagues expect.”


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Jacob Keiter is a husband, a writer, a journalist, a musician, and a business owner. His journey to becoming a writer was one that was paved with challenges, but ultimately led him to find his true calling. Jacob's early years were marked by a strong desire for creative expression. He was always drawn to music, and in his youth, he played in several bands, chasing the elusive promise of fame and success. However, despite his best efforts, Jacob struggled to find the recognition he craved. It wasn't until he hit a low point in his life that Jacob discovered his love for writing. He turned to writing as a form of therapy during a particularly difficult time, and found that it not only helped him to cope with his struggles, but also allowed him to express himself in a way that he had never been able to before. Jacob's writing skills quickly caught the attention of others, and he soon found himself working as a journalist for The Sun out of Hummelstown. From there, he went on to contribute to a variety of publications, including the American Bee Journal and Referee Magazine. Jacob's writing style is reflective of traditional journalism, but he also infuses his work with a unique voice that sets him apart from others in his field. Despite his success as a writer, Jacob also owns another business, JJ Auto & Home, which specializes in cleaning. Jacob's commitment to excellence is evident in all of his endeavors, whether it be in his writing or in his business ventures. Today, Jacob is the author of two books and continues to inspire others through his writing. His journey to becoming a writer serves as a reminder that sometimes our darkest moments can lead us to our greatest achievements.

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