Following a modest uptick in a volatile session the previous day, U.S. Treasuries experienced a more pronounced upward movement on Wednesday.
Bond prices surged shortly after trading commenced and maintained their gains throughout the day. As a result, the yield on the benchmark ten-year note, which inversely correlates with its price, declined by 13.5 basis points to settle at 4.653 percent.
This decrease in the ten-year yield builds on the previous day’s 1.5 basis point reduction, further eroding gains after the yield reached its highest closing level in over a year on Monday.
The rally in Treasuries was supported by favorable market reactions to the Labor Department's closely observed report on consumer price inflation for December.
Although the report indicated a slightly higher than expected rise in consumer prices for December, the annual growth rate of core consumer prices decreased unexpectedly.
According to the Labor Department, the consumer price index increased by 0.4 percent in December, following a 0.3 percent rise in the preceding month. Economists had anticipated another 0.3 percent rise.
Additionally, the report noted an advance in the annual growth rate of consumer prices, climbing to 2.9 percent in December from 2.7 percent in November, aligning with economist projections.
Conversely, core consumer prices, which exclude the volatile food and energy categories, inched up by 0.2 percent in December, following a consistent 0.3 percent increase over the prior four months. This slight rise met expectations.
The annual growth rate of core consumer prices decelerated to 3.2 percent in December from 3.3 percent in November, contrary to economist expectations that it would remain steady.
"Core inflation isn't accelerating, and that's the key takeaway," commented Jamie Cox, Managing Partner at Harris Financial Group. "While there were market fears about inflation spiraling upward, the data doesn't support that narrative."
Looking ahead, Thursday's trading may be influenced by a slew of U.S. economic data releases, including reports on weekly jobless claims and retail sales.
The material has been provided by InstaForex Company -
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