U.S. Treasuries Gain After Inflation Surge In Line With Expectations
- New year’s selloff positioned traders for a hawkish shift
- Market absorbs $36 billion Treasury auction of 10-year notes
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U.S. Treasuries shook off the steepest jump to consumer-price inflation in four decades and absorbed a 10-year note sale, with the figures reinforcing already widespread anticipation that the Federal Reserve will start raising interest rates in March.
The December inflation figures were in line with the bond market’s expectations, and while benchmark Treasury yields initially rose moderately across the curve after the release, buyers soon emerged. The year-on-year jump in the consumer price index matched a forecast increase of 7%, while the core rate, which excluded food and energy prices, was a little hotter, expanding at a pace of 5.5%, versus an expected 5.4%.