U.S. Treasury yields edged higher early Wednesday before the release of the U.S. consumer inflation data for January.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.175% rose 1.5 basis points to 1.172%, nearing the key 1.2% level that has contained the benchmark maturity since last February. The 2-year note rate TMUBMUSD02Y, 0.117% was flat at 0.117%, while the 30-year bond yield TMUBMUSD30Y, 1.964% climbed 1.7 basis points to 1.964%.
What’s driving Treasurys?
Bond yields renewed their trend higher before a release of January consumer prices data. MarketWatch-polled analysts are predicting on average a 0.3% increase in inflation last month, but a more muted increase of 0.1% for the core gauge stripping out for volatile food and energy prices.
Bond investors fear the influence of higher consumer prices as it can erode the value of a bond’s fixed interest payments.
Anticipation of new debt issuance may also be weighing on the bond market. The Treasury Department’s $ 41 billion sale of 10-year notes could see broker-dealers push yields higher in an effort to draw in bond buyers.
Federal Reserve Chairman Jerome Powell and New York Fed President John Williams will later speak on Wednesday.
What did market participants say?
“For the 10-year auction we expect good demand as the issue trades at the upper-end of this year’s trading range,” said Justin Lederer, an interest-rate analyst at Cantor Fitzgerald.