Ten-Year Yield Reaches Three-Month High Following Inflation Data

(RTTNews) - Treasuries once again failed to sustain an early move to the upside after turned lower over the course of the trading day on Tuesday.

Bond prices saw a downturn in morning trading and slid more firmly into negative territory in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.4 basis points to 3.839 percent.

The ten-year yield closed higher for the third consecutive session, ending the day at its highest closing level in three months.

The weakness among treasuries came even though the Labor Department's highly anticipated report on consumer price inflation added to optimism about the Federal Reserve leaving interest rates unchanged on Wednesday.

The report said the consumer price index inched up by 0.1 percent in May after climbing by 0.4 percent in April. Economists had expected prices to tick up by 0.2 percent.

Excluding food and energy prices, core consumer prices rose by 0.4 percent in May, matching the increase seen in each of the two previous months as well as economist estimates.

The Labor Department also said the annual rate of consumer price growth slowed to 4.0 percent in May from 4.9 percent in April. Economists had expected the pace of growth to slow to 4.1.

The year-over-year growth in May marked the smallest annual increase since the period ending March 2021.

The annual rate of core consumer price growth also slowed to 5.3 percent in May from 5.5 percent in April, in line with expectations.

Following the release of the report, CME Group's FedWatch Tool is indicating a 94.2 percent chance the Fed leaves interest rates unchanged.

However, the stubbornly elevated rate of core consumer price inflation may have led to concerns about the Fed resuming rate hikes in July.

The Fed's monetary policy announcement is likely to be in the spotlight on Wednesday, while traders are also likely to keep an eye on a Labor Department report on producer price inflation.