By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices fell on Friday, pushing benchmark yields to new highs, after a brief reprieve following a report showing U.S. inflation continues to be driven by rising energy costs.
The data will likely allow the Federal Reserve to maintain easy monetary-policy measures but at the same time further reduce the argument for expanding the central bank’s bond-purchase program.
Yields on 10-year notes 10_YEAR +3.16% , which move inversely to prices, rose 7 basis points to 2.35%, from 2.36% before the data. A basis point is one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR +1.35% added 4 basis points to 3.46%, off a high of 3.48%.
Yields on 5-year notes 5_YEAR +6.13% jumped 5 basis points to 1.15%.
Yields on all three securities are still at their highest level in more than four months.
Two-year note yields 2_YEAR +2.36% added 2 basis points to 0.39%, near their highest level since July.
Bonds pared losses after a Labor Department report showed the consumer price index rose 0.4% in February. Core prices, excluding food and energy, rose a less-than-expected 0.1%, however. Read more on retail-level inflation.
“Despite the spike in energy prices, which should have only temporary effects on CPI inflation, the downward trajectory for consumer price inflation remains largely intact,” said Millan Mulraine, senior macro strategist at TD Securities. “We expect the benign inflationary backdrop and weak pace of slack absorption in the economy to provide a supportive environment for monetary policy.”
