Treasury yields rise as investors examine inflation outlook

U.S. Treasury yields were higher on Monday as investors took stock of the state of the economy and the outlook for inflation after the latest key data release.

As of 6:37 a.m. ET, the 10-year Treasury yield was up nearly 3 basis points at 3.777%. The 2-year Treasury yield was last at 3.612% after rising more than 4 basis points.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Investors were assessing the state of the economy, including the evolution of inflation and what that could mean for interest rates after the release of key data.

The latest personal spending price index — the Federal Reserve’s preferred inflation gauge — was released Friday, with data showing a 0.1% month-over-month increase in August. The monthly figure was in line with forecasts of economists surveyed by Dow Jones.

The 12-month inflation rate stood at 2.2%, compared to 2.5% in July and the lowest since February 2021.

Core PCE, which excludes more volatile food and energy costs, rose 0.1% from the previous month and 2.7% on an annual basis, which was in line with expectations.

This comes as investors’ attention has shifted to the state of the economy and its slowdown, after the Fed began cutting interest rates earlier this month.

Investors are expected to receive more clues on how the economy is doing in the coming week, as new manufacturing and services PMI figures are expected, as well as the latest job supply figures. employment and the September employment report. The latter includes data on non-agricultural wages and unemployment.

Various Fed policymakers, including Chairman Jerome Powell, are also expected to make remarks.