U.S. Treasury yields witnessed an increase on Friday as investors mulled over recent economic data and its potential implications for Federal Reserve monetary policy.
At 4:27 a.m. ET, the yield on the 10-year Treasury stood at 4.2635%, marking an uptick of over two basis points. Meanwhile, the 2-year Treasury yield was at 4.6075%, having climbed by nearly four basis points.
It’s important to note that yields and prices maintain an inverse relationship, with one basis point equivalent to 0.01%.
Recent data unveiled on Thursday indicated a notable 0.8% decline in retail sales figures for January, surpassing economists’ earlier projections. Analysts surveyed by Dow Jones had anticipated a more modest 0.3% decrease.
Meanwhile, the most recent initial weekly jobless claims — also unveiled Thursday — indicated ongoing robustness in the labor market, with a tally of 212,000, down from an upwardly revised 220,000 in the preceding period.
Investors have maintained a close eye on economic indicators for indications of potential economic softening, which could signal the onset of interest rate reductions shortly.
In recent weeks, uncertainty has prevailed among market participants regarding the timing and frequency of potential rate cuts this year, coupled with concerns about the repercussions of elevated rates on the economy.
Federal Reserve officials have consistently emphasized that their decision-making process will be guided by incoming data. Earlier in the week, the consumer price index for January revealed a 0.3% uptick monthly and a 3.1% surge on an annual basis, slightly surpassing expectations.
Additional inflationary indicators are anticipated on Friday with the release of the producer price index, which monitors inflation at a wholesale level. Additionally, preliminary data on building permits for January and a new consumer sentiment report are set to be unveiled on Friday.
