Recent economic data released regarding core inflation showed it reached the Federal Reserve’s target of 2 percent, the first time in six years, but it left Treasury yields mixed on Friday.
The U.S. 10-year Treasury note has noticeably been projecting a flat yield curve and moved little at 0.007 percent as of 12:15 pm Eastern Time–a flattening yield curve that has some market experts worried that an inversion could lead to a recession.
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Today, the 10-year been trading within range between a yield of 2.87 percent and 2.83 percent.
Meanwhile, the U.S. 2-year Treasury Note has also been relatively flat and up 0.02 percent as of 12:15am Eastern Time. Its yield range thus far today has fallen between 2.54 percent and 2.50 percent.
“The Fed is projecting that core inflation will not rise further from here, but we suspect that core inflation will continue to trend higher, as capacity constraints begin to bite. That will keep the pressure on the Fed to keep hiking rates once a quarter over the coming year or so,” said Michael Pearce, senior U.S. economist at Capital Economics, in a note.
Consumer Spending Picked Up in May
In addition to the core inflation data, the Fed also revealed that consumer spending rose 0.2 percent in May versus 0.5 percent in April. According to a survey of economists by MarketWatch, this is less than the predicted 0.6 percent increase.
However, personal income gained 0.4 percent in May after a 0.2 percent rise in April.
For more trends in fixed income, visit the Fixed Income Channel.