Treasuries Move Modestly Lower After Early Move To The Upside

(RTTNews) - After moving to the upside early in the session, treasuries gave back ground over the course of the trading day on Wednesday.

Bond prices pulled back well off their early highs, eventually ending the day modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up 1.9 basis points to 4.451 percent after hitting a low of 4.359 percent.

With the uptick on the day, the ten-year yield added to the 12.4 basis point spike seen on Tuesday, reaching its highest closing level in over four months.

Treasuries initially benefited from the release of closely watched consumer price inflation data that came in line with economist estimates.

The Labor Department said its consumer price index crept up by 0.2 percent in October, matching the upticks seen in each of the three previous months as well as expectations.

The report also said the annual rate of consumer price growth accelerated to 2.6 percent in October from 2.4 percent in September. The faster growth also came in line with economist estimates.

Excluding food and energy prices, core consumer prices climbed by 0.3 percent in October, matching the increases seen in each of the two previous months along with expectations.

The annual rate of core consumer price growth was unchanged from the previous month at 3.3 percent, which was also in line with estimates.

While the data increased confidence the Federal Reserve will continue lowering interest rates next month, inflation remaining somewhat sticky led to uncertainty about the likelihood of future rate cuts.

"The 2.6% year-over-year print, while expected, may keep the Fed mindful from declaring victory over its campaign to quell inflation," said Quincy Krosby, Chief Global Strategist for LPL Financial.

CME Group's FedWatch Tool is currently indicating an 82.3 percent chance of another quarter point rate cut in December but a 60.2 percent chance rates will then be left unchanged in January.

Reports on producer price inflation and weekly jobless claims are likely to attract attention on Thursday along with remarks by Fed Chair Jerome Powell.