January 13, 2023: -On Thursday, Treasury yields decrease as investors digested a critical inflation report showing a slight price pressure decline.
The yield on the ten year benchmark was down by seven basis points at 3.49%. The 2-year Treasury yield was trading seven basis points lower at around 4.16%.
Yields and cast move in opposite directions, and one basis point equals 0.01%.
The consumer price index, which measures the cost of a broad basket of goods and services, decreased by 0.1% for the month, in line with the Dow Jones estimate. That equated to the most significant month-over-month decrease since April 2020, as much of the country was in lockdown to combat Covid.
Removing volatile food and energy prices, the core CPI rose 0.3%, meeting anticipation. It increased 5.7% from a year ago, again in line.
That’s the previous CPI reading before the Fed’s next meeting on January 31 and February 1, which concludes with the central bank’s latest interest rate decision. Fed people have hinted that future policy could be affected by the recent inflation figures.
With persisting uncertainty regarding whether the Fed will hike prices by 25 or 50 basis points next, investors will gain new clues from Thursday’s CPI data.
Following the four consecutive 75 basis point rate increases, the central bank slowed the speed of rate hikes to 50 basis points at its previous meeting. Many are hoping that the Fed keeps slowing or completely stops rate hikes as concerns about their speed dragging the U.S. economy into a slump have spread.
Starting jobless claims data and the monthly budget statement will be published on Thursday, which will give investors insights into the broader state of the U.S. financial.