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Long-term US Treasury yields rise on rising inflation

FILE PHOTO: The US Federal Reserve Building in Washington.  March 18, 2008. REUTERS/Jason Reed/File Photo
FILE PHOTO: The US Federal Reserve Building in Washington. March 18, 2008. REUTERS/Jason Reed/File Photo

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 9 (Reuters) – Yields on longer-dated U.S. Treasury bonds rose on Friday after data showed producer prices in the country rose more than expected in November, suggesting that interest rates will stay higher for longer.

* However, the year-on-year rate of the core producer price index, which excludes food and energy, has declined, giving the Federal Reserve room to slow its pace of tightening, as Chairman Jerome Powell indicated on 30th november.

* Data showed the Producer Price Index (PPI) for US final demand rose 0.3% last month, with the October figure revised up to show the PPI gained 0.3%. instead of the 0.2% that had been previously reported. Economists polled by Reuters had expected the PPI to rise 0.2% last month.

* Excluding food and energy, producer prices rose 6.2% year-on-year, above forecasts but down from 6.8% the previous month.

* US bond yields continued to rise after data showed consumer confidence rose in December while inflation expectations eased to 15-month lows.

* The preliminary reading for December of the general index of consumer confidence from the University of Michigan stood at 59.1, up from 56.8 the previous month. One-year inflation expectations fell to 4.6%, the lowest in 15 months, from 4.9% in November.

* The yield on the 10-year Treasury note rose 5 basis points to 3.544%. The return on the 30-year notes was up 6.5 basis points to 3.520%.

* The part of the Treasury yield curve that measures the spread between two-year and 10-year debt lowered its investment to -76.3 basis points on Friday. On Wednesday, the curve inverted to -85.2 basis points, its highest in two weeks. The inversion of this curve usually heralds a recession.

* At the shorter end of the curve, the two-year US Treasury yield, which tends to move in step with interest rate expectations, fell 0.7 basis points to 4.305%.

(Reporting by Gertrude Chavez-Dreyfuss; Editing in Spanish by Ricardo Figueroa)

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