"Today for the most part is just trying to get through the day for tomorrow, with the CPI data, the biggest driver of the week," said Tom Simons, U.S. economist, at Jefferies in New York. "It's really hard to put together a case for a strong position before that data. That's why you're seeing a little wiggle in yields where they were a little bit lower overnight and into the open, but backed off a little bit to trade more or less unchanged." The report on the U.S. consumer price index could reinforce rate hike expectations, analysts said, even though Wall Street economists see inflation slowing down. Headline inflation for March is expected to rise 0.2%, from a gain of 0.4% in February, while that for the core is seen climbing 0.4%, according to a Reuters poll. "There is some marginal upside risk to CPI," Simons said. The trend that has been in place recently suggests that we're not going to see many minus signs in the components. We are still going to see firm service inflation, with housing inflation firm as well." New York Fed President John Williams further added to the rate-hike chorus on Tuesday. He said the Fed raising its benchmark interest rate only once more and in a 25-bp increase is a useful starting point but the central bank's policy path will depend on incoming data. In late morning trading, the yield on 10-year Treasury notes was up 2.2 bps at 3.437%.
U.S. 30-year yields rose
0.9
bps to
3.636
%.
A widely-tracked part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , remained inverted at -60.1 bps. The inversion of this yield curve typically precedes recession. The curve has been inverted since July last year. The U.S. two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, advanced 2.7 bps to 4.035%.
Ahead of CPI, breakeven rates from three years and up
were all higher on the day.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.335, up 1.6 bps, indicating the market sees inflation averaging this percentage over the next five years.
Also this week, the Treasury will auction $90 billion in U.S. three-year, 10-year, and 30-year maturities. Later on Tuesday, the government will sell $43 billion in three-year notes.
April 11 Tuesday 10:54AM New York / 1454 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.915 5.0467 0.045
Six-month bills 4.79 4.9907 0.008
Two-year note 99-175/256 4.0433 0.035
Three-year note 102-62/256 3.8064 0.035
Five-year note 100-86/256 3.5504 0.031
Seven-year note 100-200/256 3.4975 0.027
10-year note 100-120/256 3.4431 0.028
20-year bond 101-156/256 3.7589 0.015
30-year bond 99-152/256 3.6473 0.020
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 32.50 0.00
spread
U.S. 3-year dollar swap 17.50 0.50
spread
U.S. 5-year dollar swap 8.00 0.50
spread
U.S. 10-year dollar swap -0.25 -0.50
spread
U.S. 30-year dollar swap -42.25 -0.75
spread
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama)
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))