Treasuries Move Modestly Higher Ahead Of Inflation Data

(RTTNews) - Following the pullback seen during last Friday's session, treasuries showed a modest move back to the upside during trading on Monday.

Bond prices gave back ground after an early advance but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.3 basis points to 4.481 percent.

The ten-year yield partly offset the 5.5 basis point increase seen last Friday but remains above the one-month closing low set last Thursday.

The modest rebound by treasuries came amid renewed optimism about an interest rate cut by Federal Reserve in the coming month, although buying interest remained subdued ahead of key inflation data due this week.

The Labor Department is scheduled to release its reports on producer and consumer price inflation on Tuesday and Wednesday, respectively.

Economists expect producer prices to rise by 0.3 percent in April after edging up by 0.2 percent in March, while the annual rate of growth is expected to tick up to 2.2 percent from 2.1 percent.

Consumer prices are expected to climb by 0.4 percent in April, matching the increase seen in March. Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in April after climbing by 0.4 percent in March.

The annual rate of consumer price growth is expected to dip to 3.4 percent in April from 3.4 percent in March, while the annual rate of core consumer price growth is expected to slow to 3.6 percent from 3.8 percent.

The Labor Department's report on producer price inflation is likely to be in focus on Tuesday along with remarks by Fed Chair Jerome Powell during a moderate discussion with De Nederlandsche Bank President Klaas Knot.