Treasury yields fell on Friday as investors digested the previous day's economic data and looked forward to another reading of inflation.
The yield on the benchmark 10-year Treasury note fell 2 basis points to 4.1085% at 3:37 a.m. ET, while the yield on the 2-year Treasury note fell 1 basis point to 4.3036%. Yields move inversely to prices and one basis point is equal to 0.01%.
This came after U.S. gross domestic product data came in well above expectations in the fourth quarter, with the economy growing at an annual rate of 3.3% – higher than economists' expectations of 2%.
Meanwhile, inflation continued to slow. The core consumer spending price index – which the Federal Reserve monitors for longer-term inflation trends – rose 2.7% on an annual basis, compared with 5.9% a year earlier.
Treasurys
| TICKER | COMPANY | YIELD | CHANGE |
|---|---|---|---|
| US1M | US 1-month Treasury bonds | 5.39% | +0.025 |
| US3M | 3-month US government bonds | 5.414% | +0.052 |
| US6M | 6-month US government bonds | 5.234% | +0.02 |
| US1Y | US government bonds with a maturity of 1 year | 4.809% | +0.048 |
| US2Y | US Treasury bonds with a 2-year maturity | 4.31% | -0.004 |
| US10Y | 10-year US Treasury bonds | 4.109% | -0.023 |
| US30Y | 30-year US Treasury bonds | 4.356% | -0.025 |
Investors are closely watching economic data for clues as to when the Federal Reserve might begin cutting interest rates.
“Although GDP growth in the fourth quarter was stronger than expected, underlying inflation continued to slow, with annualized core PCE inflation in the fourth quarter at the 2% target,” said Paul Ashworth, chief North America economist at Capital Economics . “The bottom line is that a Fed rate cut in the spring is still the most likely outcome.”
Data scheduled for Friday includes the December Personal Consumption Expenditure Price Index, a preferred measure of inflation by the Federal Reserve. Core PCE prices are expected to have risen 3% year-on-year in December, according to economists surveyed by Dow Jones.