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US Treasury yields recover after CPI data

FXStreet (Mumbai) - The yields across the short-end and the long-end of the US treasury market curve recovered losses after the CPI data in the US printed higher than the market expectation. Month-on-month the CPI index came-in higher than the market expectation.

The Two-year yield, which mimics short-term interest rate expectations, recovered to 0.521% from the pre-data low of 0.504%. The Ten-year yield recovered to 2.34%, from the pre-data low of 2.313%. Meanwhile, yields at the short –end posted sharp recovery. The yields were pushed higher as the CI in October came-in at 1.7% year-on-year, compared to the market expectation of 1.6%. Month-on-month, the inflation came-in at 0.0%, against the expectation of a 0.1% decline. Meanwhile, core inflation number printed in-line with the expectations.

The higher-than-expected inflation data came-in a day after the Federal Reserve minutes revealed that the policymakers were concerned about falling inflation expectations. Thus, the data released today is likely to reinforce the expectations that the Fed is on track to raise interest rates next year.

In the meantime, the initial jobless claims for the last week printed at 291K, compared to the market expectation of 284K. The previous week’s figure was revised upwards to 293K. The rise in the jobless claims may cap gains in the treasury yields.

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