By Mark DeCambre
U.S. Treasury yields rose on Friday and ended higher for the week, with long-dated debt registering the steepest weekly climb in months, after economic data showed an upward march in the cost of living, based on the Federal Reserve’s preferred inflation gauge, the personal-consumption expenditures, or PCE.
How Treasurys are performing?
The 10-year Treasury note yields /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.93% closed around 1.535%, versus 1.486% at 3 p.m. Eastern Time on Thursday.
The 30-year Treasury bond rate /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y -0.61% was at 2.169%, up 7.4 basis points, compared with 2.095% a day ago.
The 2-year Treasury note /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y 0.00% was yielding 0.270%, from 0.266% on Thursday.
For the week, the 10-year Treasury note picked up 8.6 basis points and marked its biggest weekly yield gain since March 19; the 30-year Treasury rose 14.2 basis points for its steepest weekly gain since Jan. 8, according to Dow Jones Market Data.
The 2-year Treasury note rate climbed 1.4 basis points on the week, marking its fourth consecutive yield climb, pushing the note to its highest rate since April 7, 2020.
Yields marched higher for the week but at an orderly pace, which perhaps helped to pave the way for a rally in U.S. equities.
The U.S. core PCE price index, the Federal Reserve’s favored inflation gauge that strips out energy and food rose 3.4% in the May year , the biggest increase in since 1992. The overall PCE price index rose 3.9% for the year, the biggest increase since August 2008.
However, the month-to- month increase for core inflation of 0.5% in May and 0.4% for the headline index were less than forecast and followed bigger monthly readings for April .
The Fed has said that it views PCE as its preferred metric because it is believed to reflect changes in prices that the Labor Department’s consumer-price index may not. The PCE puts more weight on medical expenses and tracks both direct and indirect costs borne by consumers.
A measure of consumer income was down 2% in May, while spending was flat.
The report comes amid a worry about surging inflation, but comments from Federal Reserve Chairman Jerome Powell earlier this week may have injected some calm in markets. However, the trajectory for rates is expected to eventually be higher.