Treasury yields slip as investors digest recent U.S. inflation data

Bond yields edged lower on Monday as investors digested the flurry of data releases from the previous week and wondered whether the US Federal Reserve might slow its tightening cycle on news of improved inflation.

The benchmark 10-year Treasury yield was last down 5 basis points to 2.799%, while the 30-year Treasury yield was trading unchanged at 3.011%. The 2-year Treasury yield was down about 5 basis points to 3.205%. Yields move inversely with prices and the basis point is equal to 0.01%.

The previous week brought a flurry of economic data, including more positive inflation news than many in the markets expected. Last week’s data revealed imports fell slightly more than expected, lower export prices and higher-than-expected consumer sentiment in the University of Michigan’s preliminary August reading.

A steady rise in U.S. consumer prices also slowed to an 8.5 percent year-on-year rise in July, data showed last week, slightly less than expected due to a drop in oil prices.

Still, the Fed has yet to buy into the bond market’s obvious outlook that the rate-hike cycle is nearly over.

Investors will be looking forward to housing data this week, including new housing starts, mortgage applications and building permits, as well as retail sales, industrial production, manufacturing output and annual Redbook data.

Fed Governor Christopher Waller is scheduled to speak at the week-long 2022 Summer Seminar on Money, Banking, Payments and Finance in Washington, D.C., hosted by the Board of Governors of the Federal Reserve.