The personal consumption expenditures (PCE) price index gained 0.1% in March after rising 0.3% in February, leaving it up 4.2% over the last 12 months compared with a 5.1% annual gain in February.
The unchanged reading in consumer spending last month, meanwhile, followed a downwardly revised 0.1% gain in February. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.1 basis points at 4.066%. The yield on 10-year Treasury notes was down 7.8 basis points to 3.450%, while the yield on the 30-year Treasury bond was down 7.8 basis points to 3.678%.
Bond yields move in the opposite direction of prices.
"Today’s numbers indicate what the trend has been, which is lower inflation," said Peter Cardillo, chief market economist at Spartan Capital Securities. "It’s still high but it’s something that the Fed needs to take into consideration." Still, the bond market appeared to remain concerned about a possible showdown over the U.S. debt ceiling. One-month Treasury yields, which spiked higher Thursday on rising concerns of a U.S. debt ceiling showdown, rose 2 basis points to 4.25%.
"You see lots of weird things going on because people are positioning their portfolios to get ready with the debt ceiling looming," said Jamie Cox, managing partner for Harris Financial Group. "We are staring down the teeth of the beginning of a recession so we don't think yields are going to rise much from here."
The Federal Reserve is widely expected to increase benchmark rates by 25 basis points at the conclusion of its policy meeting next week. Markets are pricing in a 26% chance of another 25 basis point increase in June, a level that remained unchanged after Friday's inflation data.
"While there might be an argument for the Fed to hike further, the credit tightening triggered by the regional banking turmoil has introduced enough uncertainty to keep the Fed from pushing beyond 5.25%," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at -61.4 basis points.
April 28 Friday 2:53PM New York / 1853 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.96 5.0899 -0.105
Six-month bills 4.85 5.052 -0.005
Two-year note 99-162/256 4.0682 -0.029
Three-year note 99-234/256 3.7805 -0.046
Five-year note 99-210/256 3.5395 -0.063
Seven-year note 99-246/256 3.5063 -0.067
10-year note 100-92/256 3.456 -0.072
20-year bond 100-228/256 3.8102 -0.074
30-year bond 98-248/256 3.6821 -0.074
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 28.25 -0.25
spread
U.S. 3-year dollar swap 17.25 0.75
spread
U.S. 5-year dollar swap 8.50 1.00
spread
U.S. 10-year dollar swap 0.75 0.75
spread
U.S. 30-year dollar swap -41.50 1.00
spread
(Reporting by David Randall; Editing by Kirsten Donovan, Hugh
Lawson and Diane Craft)
