Federal Reserve Bank of Cleveland President Loretta Mester said on Thursday inflation remains too high and that she was open to raising rates by more than her colleagues wanted at their last monetary policy meeting. "Data releases like this are why policymakers continue to reiterate their intention to raise rates higher before pausing, and then leaving rates in a restrictive territory for quite a while," Jefferies said in a note. A second report from the Labor Department on Thursday showed monthly producer prices accelerating in January. The producer price index for final demand rebounded 0.7% last month after decreasing 0.2% in December. On Tuesday, consumer price index data showed inflation accelerated in January. Headline prices increased 0.5% month-over-month while core prices rose 0.4%, in line with forecasts. However, both rose slightly more than expected on an annualized basis. <USCPI=ECI, USCPF=ECI> “The January producer price index issued the same message as the consumer price index that the U.S. disinflationary process will be a windy path, not a straight one," said Bernard Yaros, Jr., assistant director and economist at Moody's Analytics.
The Treasury Department auctioned $11 billion in 30-year
Treasury inflation-protected securities on Thursday at a high
yield of 1.550%, meeting demand expectations. It sold $15
billion of 20-year notes on Wednesday with a yield of 3.977%.
Feb. 16 Thursday 3:05 p.m. New York / 2005 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.6775 4.7986 0.026 Six-month bills 4.82 5.0083 0.002 Two-year note 99-6/256 4.6528 0.026
Three-year note 99-12/256 4.3428 -0.005 Five-year note 97-106/25 4.0816 0.043 6
Seven-year note 97-6/256 3.9943 0.051 10-year note 97 3.8647 0.058 20-year bond 97-156/25 4.0507 0.068
6
30-year bond 94-236/25 3.9142 0.062 6
DOLLAR SWAP SPREADS
Last Net
(bps) Change
(bps)
U.S. 2-year dollar swap 31.75 -2.00
spread
U.S. 3-year dollar swap 19.25 -0.75
spread
U.S. 5-year dollar swap 6.25 -0.75
spread
U.S. 10-year dollar swap -1.00 0.25
spread
U.S. 30-year dollar swap -40.75 0.00
spread
(Reporting by Matt Tracy; Editing by Nick Macfie)