Treasuries Move Sharply Lower In Reaction To Latest Data

(RTTNews) - After ending last Thursday's choppy session slightly lower, treasuries showed a more substantial move to the downside during trading on Monday.

Bond prices came under considerable selling pressure in morning trading and remained firmly negative throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 12.3 basis points to 4.329 percent.

Treasuries initially moved lower in reaction to closely watched U.S. consumer price inflation data that was released while the markets were closed for Good Friday.

While the purportedly Federal Reserve-preferred data largely came in line with economist estimates, traders expressed uncertainty about whether inflation is slowing quickly enough to guarantee the interest rate cuts currently anticipated.

The Commerce Department report said the annual rate of consumer price growth ticked up to 2.5 percent in February from 2.4 percent in January, in line with estimates.

Meanwhile, the annual rate of growth by core consumer prices, which exclude food and energy prices, slowed to 2.8 percent in February from an upwardly revised 2.9 percent in January.

Economists had expected the pace of core price growth to come in unchanged compared to the 2.8 percent originally reported for the previous month.

Treasuries saw further downside following the release of a report from the Institute for Supply Management unexpectedly showing modest growth in U.S. manufacturing activity in the month of March.

The ISM said its manufacturing PMI jumped to 50.3 in March from 47.8 in February, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 48.4.

With the much bigger than expected increase, the index returned to expansion territory for the first time since September 2022.

The ISM said the prices index also jumped to 55.8 in March from 52.5 in February, as commodity driven costs remain unstable.

Trading on Tuesday may be impacted by reaction to reports on factory orders and job openings as well as remarks by several Fed officials.