U.S. Treasury yields declined Friday as investors digested fresh economic data and assessed how they could impact future Federal Reserve monetary policy moves.
At 4:05 p.m. ET, the yield on the 10-year Treasury dropped by more than 6 basis points at 4.188%. The 2-year Treasury yield was last down by nearly 11 basis points at 4.538%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
The final reading on February consumer sentiment, which was released Friday morning, missed expectations as inflation expectations ticked higher. The University of Michigan's sentiment index came in at 76.9, below a Dow Jones estimate of 79.6. This was also lower than the January reading of 79.
This came on the back of the personal consumption expenditures index report on Thursday. The PCE report, which is the Fed's preferred inflation gauge, was in line with expectations on Thursday. Headline PCE increased by 0.3% on a monthly and 2.4% on an annual basis in January, while core PCE — which strips out food and energy prices — rose by 0.4% for the month and 2.8% from a year earlier.
The annual figures were slightly lower than December's readings, but still remained above the Fed's 2% target range. The PCE data comes soon after both the consumer and producer price index reports for January, which also track inflation, came in hotter than expected.
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Fed officials have in recent weeks expressed caution about cutting rates too soon and made clear that data would continue to inform their decision-making. Several speakers have indicated rate cuts were expected to come this year, but there have been few clues about a potential timeline.
