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Aug 9, 2018

Bonds & Fixed Income at Close Report: US Treasury yields slip after data indicates tame inflation I CNBC


U.S. government debt yields held at session lows Thursday after the U.S. government reported that producer prices rose less than expected in July, one possible sign of anemic inflation in the economy.
The yield on the benchmark 10-year Treasury note was 3 basis points lower at around 2.94 percent at 11:17 a.m. ET, while the yield on the 30-year Treasury bond was also lower at 3.093 percent. Bond yields move inversely to prices.
The U.S. Labor Department said Thursday that its U.S. producer price index was unchanged in July, falling short of a 0.2 percent increase expected by economists polled by Reuters. The producer price index minus volatile food, energy and trade components, rose 0.3 percent after a similar gain in June.
In the 12 months through July, the core PPI increased 2.8 percent after rising 2.7 percent in June. The lackluster reading comes as the economy reaches full employment and strong growth; individual reads on inflation are expected to rise as the Trump administration's tariffs on lumber, steel, aluminum and Chinese goods start to influence price pressures.
Markets around the world are pointing in different directions Thursday, as investors monitor the latest developments in the trade spat between the U.S. and China.
On Wednesday, U.S. Treasury yields came under pressure after Beijing announced it would counter the most recent round of U.S. tariffs with its own. The Chinese Ministry of Commerce announced a 25 percent charge on $16 billion worth of U.S. goods.
In total, 333 goods have been picked out by China, including vehicles, various types of fuels, recyclables and fiber optical cables. It followed an announcement by the U.S. Trade Representative's office that the States would begin gathering levies on an additional $16 billion in Chinese goods from later this month.
On the central banking front, another member of the U.S. Federal Reserve is scheduled to speak, a week after the Fed held fire on raising interest rates. Chicago Fed President Charles Evans is seen to be participating in a group media interview in Chicago.
The U.S. Treasury is set to auction $18 billion in 30-year bonds. The size of three separate bills, all due to be auctioned next week, will also be announced.

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