Treasuries Move Notably Higher Following Consumer Price Inflation Data

(RTTNews) - After ending the previous session little changed, treasuries showed a strong move to the upside during trading on Wednesday.

Bond prices advanced early in the session and remained firmly positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.2 basis points to 4.412 percent.

The strength among treasuries came following the release of a closely watched Labor Department report showing U.S. consumer prices increased by slightly less than expected in the month of May.

The Labor Department said its consumer price index inched up by 0.1 percent in May after rising by 0.2 percent in April. Economists had expected another 0.2 percent increase.

Meanwhile, the report said the annual rate of consumer price growth accelerated to 2.4 percent in May from 2.3 percent in April. The annual rate of consumer price growth was expected to speed up to 2.5 percent.

Excluding food and energy prices, core consumer prices still crept up by 0.1 percent in May after edging up by 0.2 percent in April. Economists had expected core consumer prices to rise by another 0.2 percent.

The annual rate of core consumer price growth in May was unchanged from the previous month at 2.8 percent, while economists had expected the annual rate of core consumer price growth to accelerate to 2.9 percent.

"Despite sticky inflation, tariffs have not yet showed up in consumer prices, but a lot depends on the absorption rate of U.S. companies and foreign suppliers," said Eric Teal, Chief Investment Officer for Comerica Wealth Management.

He added, "We believe that the majority of the tariffs will eventually get passed to the consumer, but companies are cautious at this juncture about passing along the price increase."

Trading on Thursday may be impacted by reaction to the latest U.S. economic data, including reports on producer price inflation and weekly jobless claims.