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Treasury Inflation Debt Rallies as CPI Supports Transitory View

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Even as the cost of living is falling, U.S. government securities that offer protection against higher inflation are rallying as investors see a glimmer of rising consumer prices on the horizon.

The gap between five-year yields on Treasury Inflation-Protected Securities and comparable maturity U.S. debt, seen as a measure of inflation expectations over the life of the securities, widened the most in three weeks. The increase followed the first consumer-price report since Federal Reserve Chair Janet Yellen said that the damping impact of falling oil prices on inflation is “transitory.” The data showed prices grew more than forecast in January when energy and food were excluded from calculations.