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Treasury Yields Remain Steady Ahead of U.s. GDP Data That Sets the Stage for Inflation Data

April 25, 2024
minute read

On Thursday, Treasury yields experienced a notable surge, propelling the policy-sensitive 2-year rate toward its highest level since November. This uptick came in response to data indicating that core PCE (Personal Consumption Expenditures) inflation exceeded expectations for the first quarter, despite a slowdown in U.S. economic growth to 1.6%.

Here's a breakdown of the key movements:

  • The yield on the 2-year Treasury note (BX:TMUBMUSD02Y) surged by 8.1 basis points to 5.014%, up from 4.933% recorded on Wednesday.
  • The yield on the 10-year Treasury note (BX:TMUBMUSD10Y) climbed by 6.8 basis points to 4.72%, compared to 4.652% on Wednesday.
  • The yield on the 30-year Treasury note (BX:TMUBMUSD30Y) rose by 4.3 basis points to 4.826%, up from 4.783% the previous day.

The release of first-quarter GDP data earlier on Thursday revealed that economic growth fell short of the 2.2% median estimate provided by economists surveyed by The Wall Street Journal. Despite this, the report offered little indication that the economy is on the brink of downturn.

Moreover, the GDP report disclosed that core inflation, excluding food and energy components, surged to a 3.7% annualized rate, based on quarterly data from the personal consumption expenditures price index. This marked an increase from the 2% rate observed in the fourth quarter.

Additionally, investors turned their attention to the upcoming $44 billion auction of 7-year notes scheduled for later on Thursday.

Chris Low, chief economist for FHN Financial in New York, commented on the situation, stating, “Yields are sharply higher this morning, despite weaker-than-expected GDP growth. It makes sense, however, given significantly worse than expected quarterly inflation." He further elaborated, “Normally, a 1.6% GDP increase would bolster the case for easing, but not under these circumstances.”

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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