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Treasury yields edged higher on Wednesday ahead of the latest producer price inflation print for June, due later in the session, as investors look for further insight on the U.S. economic picture after consumer inflation data came in cooler-than-expected in the previous session.
Yields on the 10-year Treasury note — the main benchmark for mortgages, auto loans and credit card debt — were more than 1 basis point higher at 4.5996% early Wednesday.
The yield on the 2-year Treasury note, which typically reacts in line with short-term Federal Reserve interest rate decisions, rose one basis point to 4.2039%.
The 30-year Treasury yield, which traditionally moves on geopolitical events, was up more than 1basis point at 5.1135%.
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
Traders are awaiting the latest monthly U.S. producer price reading, due later. The PPI index is expected to have held steady in June, according to consensus forecasts, having risen by 1.1% the previous month. The core number, which strips out food and energy costs, is expected to have jumped 0.3%. It previously rose 0.4%.
Bond yields eased during Tuesday’s session after the latest consumer price index print came in sharply lower than expected. The CPI index fell 0.4% in June to bring its year-on-year increase to 3.5%. That helped push expectations for a July rate hike by the Fed lower.
Meghan Shue, chief investment strategist at Wilmington Trust, said that core inflation continues to indicate that higher energy prices have not passed through materially to inflation, while tariff headwinds continue to fade.
“On the encouraging side [we’re seeing] continued disinflation that should allow the Fed to cut by the end of the year,” Shue told CNBC’s “Morning Call” Wednesday.
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